How much life insurance should stay-at-home parents buy? Here’s what Dave Ramsey recommends

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Stay-at-home parents should read this before purchasing insurance.

Key Point

• Buying life insurance is important for stay-at-home parents, and deciding how much coverage to buy in this situation can be difficult.
• Ramsey offers whole life insurance for stay-at-home parents with benefits of $250,000 to $400,000.

Having life insurance is important to protect your loved ones from losing money in the event of an untimely death. However, with the wide range of options available when it comes to death benefits, it can be difficult to know exactly how much money a beneficiary needs.

Most experts who provide recommendations on how much to buy life insurance focus on income. In fact, the general advice is to purchase enough coverage to replace 10 to 12 times the policyholder’s income. However, not only those with income should buy insurance. Stay-at-home parents should also purchase protection.

The good news is that financial expert Dave Ramsey has some tips to help homeowners decide how much insurance to buy.

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Ramsey was very specific about the recommended death benefit amount for parents who don’t work outside the home.

“For stay-at-home parents, I recommend term life insurance worth $250,000 to $400,000,” Ramsey said. is considered appropriate.

“Term insurance gives you exactly the same amount of coverage at a fraction of the price of whole life insurance,” he explained. Whole life insurance is valid indefinitely, while term insurance he expires after a certain period of time, such as 20 years. However, most people do not need insurance forever. “In 20 years, your investment will cover you and you won’t need life insurance anymore,” Ramsey said.

Now, it may seem strange to think that stay-at-home parents need a policy at all because those who do not work outside the home do not bring in income. case death. “They may not pay for her 9 to her 5 job, but they bring great value to the household,” Ramsey explained. “It’s not cheap to replace even part of it.”

Life insurance purchased by stay-at-home parents can cover expenses such as day care and babysitting, or allow currently working parents to spend less time and more opportunities to stay home with their children.

How to buy coverage

Stay-at-home parents should consider how long their loved ones depend on the services to determine the coverage period. And they have to decide what the death benefit should be. Ramsey’s recommendations are a good starting point, but more coverage may be needed if working parents want to change to staying home in the event of an untimely death.

Once you have decided on your coverage amount, the next step is to get quotes from several insurance companies and submit your application to the insurance company that offers the most coverage at the best rate. and ask health questions as part of the application process. Once that’s done, coverage can be set up so your family can get the financial protection they need.