Welcome to Quotacy’s Q&A Friday where we answer your life insurance questions. Quotacy is an online life insurance agency where you can get life insurance on your terms. I’m Jeanna and I’m Natasha. Today’s question is: Do stay-at-home parents need life insurance? Term life insurance is typically known as income replacement, so it’s a common misconception to think that because the stay-at-home parent does not provide actual income, that this person would then not need life insurance. And this couldn’t be further from the truth. One parent often stays home with children to not only spend quality time with them but because paying for daycare is expensive. Quotacy is located in Minnesota and here in Minneapolis the average annual cost of daycare for two children is $24,570 and the cost of hiring a nanny is $26,838. For many people, that could be more than half their annual income and many families decide it’s not even worth both parents working if such a high percentage of their money is just going toward someone to stay home with their kids while they’re at work. Thinking about just daycare alone, if a stay-at-home parent were to die unexpectedly, the surviving parent needs to find an extra $24,570 per year. The surviving parent will also need to find time to transport to and from school activities, grocery shop, cook meals, clean the house, and do laundry. Or simply hire someone to do these things. Should a stay-at-home partner pass away the life insurance death benefit could cover the cost of the funeral and provide funds to hire a nanny, pay for a housekeeper, or help cover school tuition. Salary.com estimates that the average stay-at-home parent is worth an annual salary of approximately $162,000. So, if the rule of thumb of life insurance is to buy ten times your annual salary, the average stay-at-home parent should apply for $1.62 million then, right? It’s not as simple as that. Because a stay-at-home parent does not generate income, on paper it’s difficult to determine how much coverage they can be approved for. And before a stay-at-home parent can apply for life insurance, their spouse needs to have life insurance as well. Right. Life insurance companies require that the working spouse have at least the same amount of coverage that the stay-at-home parent is applying for. If the working spouse makes a substantial amount of money and, therefore, a substantial amount of life insurance, insurance companies may cut the coverage in half for the stay-at-home parent. Exactly. So, as an example of this, let’s say John Smith owns a successful business making over $100,000 a year and has a $2,000,000 life insurance policy. Most life insurance companies would then only approve $1,000,000 in coverage for John’s stay-at-home spouse. The amount of life insurance you apply for needs to be justifiable. A life insurance company doesn’t want a person worth more dead than alive. Whether you’re a working parent, divorced parent, single parent, or a stay-at-home parent, if you have children, then you need life insurance. Thanks for watching! If you have any questions about life insurance make sure to leave us a comment. And if you have any questions regarding today’s topic, check out the blog link posted below. Otherwise, tune in next week when we talk about getting life insurance without a medical exam. Bye!