You might not think to include these everyday tasks when calculating how much life insurance you need. When estimating a family's coverage, the breadwinner's salary is frequently front and center because it is critical to replace that income if the primary earner dies. However, if you undervalue the assistance you provide, your loved ones may face unexpected costs.

The impact of unpaid support

According to Mary Beth Storjohann, certified financial planner and founder of Workable Wealth, families frequently overlook life insurance coverage for a stay-at-home spouse.

According to Jessica Lepore, founder of Surevested, an artificial intelligence-powered life insurance agency, the value of services provided by a stay-at-home parent frequently far outweighs the breadwinner's income. Child care, cleaning, bookkeeping, home improvements, budgeting, and maintenance are examples of such tasks.

"So much will have to be done to compensate for that missing person — even if they don't have a traditional job," Lepore says.

Knowing how to accurately value your contribution, whether you are a stay-at-home parent or work part-time, can help you create a strong life insurance plan for your family.

How to accurately value the financial impact

According to Storjohann, the first step in valuing your coverage needs is to ask your partner what their life would be like if you were no longer there. How would your partner handle day-to-day responsibilities? Would they have to make any changes at work? Would money have to be taken out of savings? Answers to questions like these can help you determine the financial impact of your absence on your family.

When you know which services your family will need to replace, you can figure out how much money you'll need to replace them.

"How much would it cost to hire outside help for those things if you were no longer able to perform your duties?" Storjohann inquires. These prices can vary greatly depending on where you live. According to 2020 data collected by Child Care Aware of America, a research and advocacy group, center-based child care can cost twice as much in California as it does in Alabama.

Don't forget about any debts you may have. Mortgages, according to Lepore, are a significant trigger for life insurance. If you are a co-signer or co-borrower on a mortgage and assist with payments, the other signatory will be liable for the entire debt if you die. You can help the other person make mortgage payments without you if you have enough life insurance. If you are the sole owner of the property, your life insurance beneficiaries may be able to use the death benefit to pay off the mortgage and keep the house.

After you've calculated the financial impact of your absence on your loved ones, consider how long the life insurance costs will last. Child care may become unnecessary after a few years, whereas other costs may be spread out over a longer period of time.

It's a good idea to assess your financial impact following major life events such as marriage, having children, or filing for divorce. For example, if your children are no longer in need of child care, you may want to change your coverage.

Help is available if you need it

Calculating your financial impact on others is difficult, especially if you are unfamiliar with life insurance or are intimidated by financial topics. The good news is that people are talking about money more, and there are places to learn about it online, according to Storjohann.

Because life insurance policies can last for the rest of your life, it's important to be confident when making coverage decisions. If you are unsure, speak with a fee-only financial advisor or insurance agent about your policy options.

"It's critical to understand that the value of a person's life is more than just their salary," Lepore says. "They bring so much more to the table than that."