It is common for families to take out life insurance or income protection for the main breadwinner of the family.
However, have you considered what would happen if the stay-at-home parent were to die or fall ill unexpectedly?
If a stay-at-home parent were to pass away unexpectedly then the surviving parent who was previously the main breadwinner may have to cut their work hours to look after the children or pay someone to provide full-time childcare. They may also have to pay someone to do other household tasks such as the cooking/cleaning. This could lead to significant unplanned expenses.
If you consider everything that a stay-at-home parent does then you will realise that it quickly adds up so it is vital to consider life insurance for stay-at-home parents as well as working parents.
The benefits of life insurance
Life insurance provides a lump sum that you choose to remove any financial burdens from a grieving family. The pay-out is usually tax free and could be used to pay off an outstanding mortgage or other debts, fund funeral expenses or cover other living costs. The money can make life much easier for the surviving parent and may enable them to work less so they can spend more time with the children.
How much life insurance do I need?
You can choose the amount that your life insurance policy will pay out. The higher the figure, the more expensive your monthly premiums will be.
You should consider how much money you will need, most people take out enough life cover to pay off their mortgage. You can also choose the term of the policy which is the length of time that it applies. The shorter the term, the less expensive the premiums will be. For example, some parents only continue the policy for as long as their children live at home and are dependent.
The younger and healthier you are when you take out the policy, the cheaper the monthly payments will be.
Put your life insurance policy into trust
Whatever life insurance option that you choose, you should consider writing the policy into trust. This has two advantages, the first is that the policy is outside of your estate so any pay-outs will be free from Inheritance Tax. The second is that if the policy is in trust, your family do not need to wait months for probate to be granted before they get the pay-out which means they experience far less stress and worry.
A financial adviser at Four Wealth Management can help you put your life insurance policy into trust.
Book a no-obligation meeting now
Find the best insurance policy for you
Stay-at-home-parents provide a vital role for the family and create a supportive family environment. Of course, no parent can be replaced but life insurance will give families peace of mind and financial security to prevent their loved ones financially if anything unexpected were to happen.
Book a no-obligation meeting now
Trusts are not regulated by the Financial Conduct Authority.
