Do Stay-at-Home Parents Need Life Insurance? Here's What Dave Ramsey Thinks

Stay-at-home parents and their families need to read this.

Life insurance provides a death benefit when the policyholder dies. Many people buy life insurance because they have loved ones, such as a spouse or children, who are reliant on them for income. The death benefit can pay out and help surviving family members cover the bills.

But what about people who don't earn income, such as stay-at-home parents? At first glance, it may seem like they don't really need coverage since they aren't bringing money into the household. But failing to buy a policy on them could be a big mistake -- at least according to finance expert Dave Ramsey.

Ramsey thinks stay-at-home parents should have life insurance

When it comes to the question of whether a stay-at-home parent should have life insurance, Ramsey has a clear and unequivocal answer. Yes -- they need coverage. In fact, he recommends buying a policy with a death benefit that will pay out between $250,000 and $400,000. 

It may seem odd to pay premiums to get such a large payout if someone passes away when they weren't earning any income. But, just because a stay-at-home parent doesn't have an outside paycheck, doesn't mean their work doesn't have actual monetary value. 

"If the stay-at-home parent up and disappeared, how would all that food making, calendar managing, kid toting, house scrubbing, and errand running get done?" Ramsey asked. "By paying someone else (likely multiple people!)."

Ramsey explained that being a stay-at-home parent is a "ton of work," which is obvious to anyone who has ever taken care of a child or a household for even a few hours. This work would still have to be done if the parent passed away, and without life insurance to provide funds to help cover things like daycare or house cleaning, the surviving parent would be left facing a huge burden on their time and money during a very difficult time. 

Is Ramsey right? 

When it comes to buying life insurance on stay-at-home parents, Ramsey is absolutely 100% correct. Any household with a caregiver at home should get life insurance coverage right away. 

In fact, this advice doesn't just apply to people who are taking care of kids, but it applies to anyone who offers valuable services to loved ones -- even if those services are unpaid. If a person takes care of aging family members, for example, it would be important to have life insurance coverage on them because if they passed, the older relatives would need to go into a nursing home or get home care.

Ramsey's recommended amount can provide a rough estimate, but each individual person should think about what it would cost to care for their loved ones when deciding the right amount of coverage. While buying too much coverage comes with needlessly expensive premiums, it's important not to buy too little. 

Take the time to consider the cost of replacement services ASAP if there is an uninsured caregiver in the family. It's important to get covered right away, before surviving loved ones are left with serious regrets in the event of a tragic death.