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Life insurance for stay-at-home parents

Rebecca Goodman
Written by  Rebecca Goodman
Donna McConnell
Reviewed by  Donna McConnell
10 min read
Updated: 02 May 2024

Life insurance is important not just for parents who go out to work, but also for stay-at-home mums and dads. It provides a financial lifeline if a parent were to die unexpectedly and the payout from a life insurance policy can go towards a family’s everyday costs, from housing payments to childcare bills. 

Why is life insurance important for stay-at-home parents? 

If you don’t work, you may not have considered a life policy for parents before but it could be an extremely valuable financial tool. Life insurance pays out a lump sum if someone dies and this money can go towards things like housing costs, household bills, and childcare fees.  

While a stay-at-home parent may not be earning an income, they are doing a range of unpaid work, from washing and cooking to childcare and housework. If we look at childcare alone, the amount carried out by women every year in the UK is worth an estimated £382bn, according to the Centre for Progressive Policy.  

The Office of National Statistics (ONS) has a calculator which shows how much unpaid work is worth. Doing five hours of housework, 10 of childcare, five of cooking, three of laundry, and five of transport per week, for example, is worth £16,302 per year.

How does life insurance work for stay-at-home parents? 

Life insurance pays out a lump sum if someone named on the policy - a parent or carer in this case - dies. Life insurance for stay-at-home parents can provide valuable financial support if a parent dies. Some policies will also pay out the lump sum if a parent is diagnosed with a terminal illness

It can mean the surviving parent is still able to pay for things like mortgage costs on one income. It can also provide a financial safety net to pay for childcare, for them to work less hours, or to take a short break from working. 

When you take out a life insurance policy, you set the amount of money you would like it to cover. There are different types of policies to choose from, and they are usually set for a fixed period of time - such as until the youngest dependent child turns 18.  

What type of life insurance policy is best for stay-at-home mum and dads? 

Life insurance for stay at home dads or mums needs to provide enough money to cover the sum of unpaid work a stay-at-home parent does. This would need to cover things like childcare, cleaning, cooking, housework and any other jobs the non-working parent does. You can also buy a policy to cover something specific, such as the remaining amount of a mortgage. Here are the main types of policy to choose from: 

  • Level term life insurance: you’ll be covered for a set amount, over a set time, such as £200,000 over 20 years. The premiums you pay remain the same for the duration of the policy. 

  • Decreasing term life insurance: the policy is set for a specific amount of time, but the amount paid out decreases. It’s designed to cover an outstanding mortgage debt, which over time will also decrease.  

  • Whole-of-life insurance: you’ll be covered for a fixed payout for the entire life of the policyholder if you keep up with the monthly premiums.  

  • Death in service: this is a work-place insurance policy which is available with some employers. It provides a sum (usually around four times an annual salary) if the worker dies while they are employed.   

You can choose whether to buy a single life insurance policy for one person or a joint policy. A joint policy is often cheaper but only pays out once. If a parent dies it will pay out a lump sum and then the policy will end. While with two separate policies, a payout is made on each parent’s death. 

How much life insurance cover should a stay-at-home parent have?  

When calculating how much insurance cover to take out for a stay-at-home parent, you’ll want to look at all of the unpaid work they do. This includes the following: 

  • Childcare 

  • Transport 

  • Housework 

  • Cooking 

  • Cleaning 

  • Volunteer work 

  • Care for another adult 

 If you look at how many hours each week they spend doing these tasks, you’ll have a rough idea of their contribution to the household. This is the amount of money you should look to cover in a life insurance policy.   If they cover all of the childcare, for example, this could be equivalent to around £15,457 a year for a full-time nursery place for a child under two, according to the childcare charity Coram

On top of the unpaid work they do, it’s important to think about how the main breadwinner’s life may change. Their salary, for example, could fall if they work less hours or change jobs after a partner’s death. This could mean they would need more money - through the life insurance payout - to cover the household’s outgoings.  

If you’re a single parent, any dependent children will fully rely on your income and that makes having a life insurance policy in place even more important. It means if you were to die there would be a financial safety net for your child. If you write the life insurance policy in trust, this also means it’s not included when it comes to inheritance tax because it’s counted separately from your estate, and would not be used to pay off any outstanding debts.

What factors influence the cost of life insurance for stay-at-home parents? 

There are lots of factors that can impact the cost of life insurance for stay-at-home parents. They include the following: 

  • The type of policy: decreasing-term life insurance tends to be the cheapest while whole-of-life insurance is the most expensive 

  • The level of cover: the sum of money that will be paid out on one person’s death 

  • The age and health of the policyholder: the younger and healthier you are, the lower the risk of claiming on a policy and the cheaper your premiums will be 

  • Additional extras: you can choose to pay for add-ons to a policy, such as critical illness insurance, which will push up the overall cost 

How can I choose the right life insurance policy as a stay-at-home parent? 

It’s important to shop around for life insurance for stay-at-home parents as there are lots of insurers to choose from. You can buy it online directly from an insurer, through an insurance broker, or on the phone.   The right policy for you will depend on the following: 

  • Your budget: how much you can afford to pay each month on premiums 

  • The overall payout: the amount you would like a policy to pay out on death 

  • How long you would like cover: you can choose a set period or cover for your whole life 

  • What you would like covered: whether you would like a policy to pay out a sum of money for you to spend on all of your outgoings, or if you’d like one just for a mortgage 

What are the potential consequences of not having life insurance as a stay-at-home parent? 

Life insurance for parents is not mandatory but it can be really helpful in the event of a stay-at-home parent’s death.  

If it’s not in place, if that person dies the surviving spouse would need to find the money to pay for things like childcare, cooking, housework, and cleaning for the house. While they may be able to do this themselves, this means they might have to reduce their working hours, or change jobs, which could lower the household’s overall income.  

Not only does life insurance provide help financially, it also provides peace of mind. If a parent were to die unexpectedly, this would obviously be extremely upsetting and stressful for everyone involved. Having a life insurance policy in place takes away one of these stresses, as it provides money towards a mortgage or a household’s outgoings.  

Are there specific companies that specialise in life insurance for stay-at-home parents? 

Most major UK insurers offer life insurance for stay-at-home parents. As with standard life insurance, you can choose the policy you want, the length of time you’d like it in place, and the overall payout amount.  

There are some insurers that specialise in insurance for parents, and it’s worth looking at these when you compare costs. You can find most insurers online, and it’s quick to compare policies if you use a comparison website. Just remember the small print is crucial here so you know exactly what you are (and are not) covered for.  

How does the process of applying for life insurance work for stay-at-home parents? 

Applying for life insurance is the same, no matter what kind of parent you are. While every insurer is different, this is how you will usually apply:   

  1. Choose the policy type, payout amount, and how long you would like the policy for. 

  2. Give an insurer details about you, such as your name, address, and former profession, as well as information about your partner or spouse, if you have one. 

  3. An insurer will also want to know details about your health, such as if you smoke, how much exercise you do, and how much alcohol you drink. 

  4. You may need to speak to an insurer in person if they have more questions to ask you, this is usually over the phone. It will also need to see evidence of your ID, such as a driving licence or passport. 

  5. You’ll be given a quote for your premiums, which you can accept or reject. 

  6. If you reject the quote, you can look elsewhere for another policy (such as on a comparison website) 

  7. If you accept, your policy will be set up, you will begin paying your monthly premiums, and all of your policy documents will be sent to you. 

Are there any alternatives to life insurance for stay-at-home parents? 

Life insurance for parents is the only policy to pay out a lump sum on the death of a parent, however there are some similar policies to consider: 

  • Critical illness cover: this protection provides a tax-free lump sum of money if a parent is diagnosed with a critical illness or injury. It can provide money if the policyholder can’t work because of their illness, or they have to change their job because of it.  

  • Private health insurance: you’ll be covered for private medical care, from physiotherapy to private surgery or treatment, and you can usually add on family members including partners and children to a policy.

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