You’re at home, the baby is crying, Julie wants to go next door to her friend’s house now, and Johnny needs to be picked up from school in thirty minutes. It has its joys, but sometimes being a stay-at-home-parent can be trying. Your partner is appreciative of all you do with the kids though, and so when you are both reviewing your finances, you start to consider life insurance. Advocis and financial expert Nancy share how important life insurance can be for a stay-at-home-parent.
Advocis, The Financial Advisors Association of Canada, maintains in this article that any life transition is an important time to contact an advisor for financial advice. A number of financial implications can arise in the case of stay-at-home parents. What are the tax considerations for a single income? How does this affect RRSP contribution room? A financial advisor can help answer any of these questions. Without group coverage, the need for life insurance on a stay-at-home parent becomes a priority. Take time to assess the value of what the stay-at-home mom or dad does on a daily basis. Alternative daycare, housekeeping, and peace of mind costs can be very expensive. Take the time to protect your family for every possibility.
Nancy Anderson, expert in personal finance at Forbes, has first-hand experience in deciding to insure herself as a stay-at-home parent. She gives several recommendations for effective ways of insuring your loved ones. Firstly, stay-at-home parents provide tangible economic benefit to a family. The costs to replace what they do could be high. Nancy also suggests supplementing term insurance with permanent insurance. If the working partner passes away at any point, this can provide additional income stream in the future. For disability insurance, check that the working partner has selected the “own occupation” definition on their disability policy. Where some disability products will only pay if the client is unable to do any job, "own occupation" will ensure a stream of income if they are unable to do their own job.
There are many considerations and strategies to incorporate when insuring a Stay-at-Home Parent, but these three are crucial to address.
Life Transitions: Making the switch to being a stay-at-home parent is good time to meet with a financial advisor to discuss the financial implications, including life insurance.
Economic Benefit: Stay-at-home parents provide tangible economic benefit. Consider having to replace with daycare, housekeeping etc. That can add up!
Permanent Insurance: Don’t forget that this can provide an additional income stream in the future if anything happens to the working spouse at any time.
Regardless of how you and your advisor decide to go about insuring a stay-at-home parent, just remember that any coverage is important and can provide important protection for your family.
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