Tired, frustrated and discouraged, housewives sometimes caution their husbands, “If you had to pay for all I do, you could not afford me.” More than just impassioned rhetoric, housewives’ cautions rest on reliable statistics, and they add to the urgency of providing life insurance for the family’s stay-at-home spouse.
Five Very Good Reasons to Insure a Stay-at-Home Spouse
CNN’s Christine Romans and other financial planning experts say you have at least five serious and compelling reasons for insuring both the primary breadwinner and the stay-at-home spouse.
• Permanent life insurance builds cash value and provides a “cash cushion.” Buying whole life coverage for a stay-at-home spouse supplies an essential element in your family’s savings and investment plan. By contrast, although term life insurance costs considerably less than permanent protection, nevertheless it numbers among the worst investments a family can make. “When you buy term life insurance, you bet against yourself,” says Sam Karp, a La Mesa, California, insurance broker. “As you pay your annual premium on a term life policy, you bet your payment on the proposition you are more likely to die than survive the year.” Karp emphasizes the meaning of “whole life,” explaining, “The policy pays full face value if the insured person dies, but it gains cash value every year the person survives. It covers you for your whole life.”
• Premium life insurance replaces a bundle of single-purpose policies. You will pay less to insure your stay-at-home spouse than you pay for separate special-purpose policies. As they purchase homes and outfit them with major appliances, many families buy mortgage life insurance and payment protection insurance. Seldom effective for more than two or three years and often subject to strict payment caps, these policies cover only the mortgage or installment contracts for which the family them. Moreover, when policyholders file claims, insurers issue payments directly to lenders; they never make payments to policyholders. Despite their serious defects and drawbacks, each separate short-term policy costs more every month than premium whole life insurance. Whole life coverage for a stay-at-home spouse cuts monthly insurance costs, provides comprehensive coverage, and delivers a handsome return on the family’s investment.
• Life insurance guarantees stability and continuity. Of course, to guarantee your family keeps your home and maintains its quality of life, you must protect against the primary breadwinner’s death or permanent disability. In the absence of proper coverage, your family is at risk of losing everything. Do not, however, jump to the mistaken conclusion a paycheck confers extra value on the breadwinner’s life; the “chief domestic officer” has the same or greater value in everyday family operations. The average American family should insure each spouse for at least $750,000.
• Life insurance affirms the stay-at-home spouse’s value. Insuring the stay-at-home spouse’s life has at least as much symbolic as financial value because it recognizes and affirms the chief domestic officer’s major contributions to the family’s physical, psychological, emotional and spiritual health. Just as importantly, insuring the house-spouse’s life acknowledges the value of child care, transportation, financial management, food preparation and service, and the full array of domestic services. Child care alone costs the average family nearly $9,000 per year.
• You could not afford the stay-at-home spouse’s services. According to the Bureau of Labor Statistics, the average stay-at-home spouse devotes 8.6 hours per day to completion of routine domestic tasks, and the average house-spouse logs more than 60 hours during a seven-day workweek. Salary.com calculates the value of that domestic labor at more than $112,000. Because most working mothers still handle the majority of the household chores, child care, transportation and management duties, the Bureau of Labor Statistics claims they add at least 60 percent to a family’s purchasing power. Adjust your life insurance coverage accordingly.
Permanent life insurance for your stay-at-home spouse fits in your financial priorities.
In a frugal, prudent family budget, savings always takes top priority, but you must build up your emergency funds before you move on to other essentials. Put $1,000 in an easily accessible savings account for everyday catastrophes, and save at least six months’ salary by taking 10 percent from each paycheck. Then, work with a reputable, reliable insurance agent to determine how much whole life coverage each spouse needs and how to fit the premiums into your family’s monthly budget.
Editor’s note: the opinions stated in this article regarding whole versus term life insurance are the author’s own and do not reflect the official stance of Earnest Parenting (who use term life insurance for our own reasons).
Image courtesy of Lars Ploughmann via Creative Commons license, some rights reserved.