Why You Need Life Insurance Even if You Don't Have a Job

Don't assume it's an expense you can skip.

If you have people in your life who depend on you financially, then it's really important to put life insurance in place. A life insurance policy could replace your income for many years if you pass away unexpectedly, making it possible for your loved ones to pay their bills without stress.

But what if you don't work? What if you're a stay-at-home parent whose job is to watch your kids? Although it's a difficult job, it clearly doesn't come with a paycheck.

You might assume that if you don't have a paying job, it's not necessarily to get life insurance. But actually, you'd be wrong.

Stay-at-home parents need life insurance, too

You may have decided to take a career break to raise your kids for a number of years. And you might assume you don't need life insurance in that situation.

But remember, the cost of putting a child or two into a care facility could be astronomical. If you pass away, your surviving partner might need to bear that cost so that they can work. And a life insurance policy could help pay for that expense so your family isn't as burdened financially as it might otherwise be.

Care.com reports that in 2021, the cost of putting one child into a childcare center was $226 a week on average. For two kids, it was $429. Meanwhile, the cost of a nanny for one child was $694 a week, or $715 for two kids.

Expenses like these could really put a strain on your family's finances. And childcare isn't the only thing your family might need to pay for in your absence.

Let's say you pass away and leave behind a spouse and two kids. Your spouse might work a demanding job that leaves them no time to cook, clean, and care for two children on their own. So they might need to hire a housekeeper to pick up the slack -- yet another added expense.

Don't sell yourself short

If you're not holding down a job right now, you may not be contributing financially to your family. But that doesn't mean you're not contributing. And it's important to have a backup plan in case you're not around to provide the care you're giving right now.

A good bet is to calculate the annual cost of childcare in your area. Then, multiply that by the number of years you might need it until your kids are able to stay home alone.

As an example, you might estimate the cost of childcare at $20,000 a year until your oldest is 14. So if your oldest is 4 years old now, that means you may want a $200,000 life insurance policy. And if you want to add in extra money for a housekeeper, you may decide on a $300,000 policy.

Of course, life insurance is an expense your family will have to pay for. But if you opt for a term life insurance policy, you might spend a lot less than you would on a whole life policy. And you may be pleasantly surprised at how affordable your policy is.