Why a Stay-at-Home Spouse Needs Life Insurance
In typical single-income households, there is great emphasis placed on purchasing life insurance for the bread-winner. Of course this makes sense: what would happen to the remaining spouse and children (if there are any) if the primary income earner died?
But I’m going to post a question (and answer it too!) Does the stay-at-home spouse need life insurance as well?
Definitely Yes!
Ok, allow me to clarify that with a fancy if-then statement for those of us who love software development (really? no one else? C’mon – I’m sure The Happy Rock likes writing code)
Does a stay-at-home spouse need life insurance? I would contend that if the working spouse needs life insurance then the stay-at-home spouse probably needs it too.
If the working spouse needs life insurance, it is probably because there are kids in the picture and/or there are health issues involved. If it were just the two healthy spouses, if one died, presumably the other would find a job and continue living. (I know that’s an overly simplistic way to look at this)
So, let’s assume that there is a family with one spouse who stays at home with two small children while the other spouse works outside the house and brings in an income. Let’s use a specific example – a working father and a mom who stays at home with two little kids. Obviously if the father died, they would need a significant amount of money to continue their standard of living without mom having to go back to work and not being able to continue raising her kids.
But what about all that the stay at home spouse does?
But remember that both spouses have certain roles and responsibilities that would need to be filled if they were not around to do them. It’s easy to see what would need to be replaced if dad was no longer around to provide the income, but think of all the things that the mom in our example does. Who would take care of the house, provide day-to-day care for the kids, run them to various activities, and so on and so forth if she were no longer around? It would be tremendously expensive for the father to pay to replace all of that. Or, what if dad wanted to stay at home and provide the same lifestyle to which his kids are accustomed? In that case, the needs would be the same as if the sole breadwinner died.
These are the reasons that life insurance is necessary even for a spouse that doesn’t "earn" any money. Though he/she is not being paid to do his/her work on a daily basis, he/she is still doing a lot of work! And it would be extremely expensive to hire people to replace that work.
If you do not have life insurance, please consider getting some
If you are a stay-at-home spouse and don’t have life insurance (or have a stay-at-home spouse that doesn’t have any), I would urge you to check into it. Term insurance is really cheap nowadays, especially for young and healthy people. I would suggest that you look into buying a term policy for 10 or 20 years depending on the age of your kids (if you have any). Even if you have small kids, after 10 or 20 years, they wont need the same level of care and you may not need as much life insurance then. (plus, I’m sure you’ll have done a great job of saving over those years and will be closer to self-insurance anyway!)
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This is an all too important point you’re making that a lot of people miss. For a couple hundred dollars a year of term insurance, you can make sure that you can provide appropriate care for your children if the stay at home parent dies.
The scenario I often think of is the stay at home parent that has a spouse that needs to travel a lot for work. If the stay at home parent dies, then the working parent would have to consider a possibly lower paying job and additional child care. That can easily eat into any investing that was happening or worse yet, erode the past savings.
For a very small amount of money, you need to provide some peace of mind that situations like these need not be more stressful than they already will be.
David van Sunder´s latest blog post…MOB #51 – Bank Failures, Credit Limit Crackdown, & Our Financial Platform
@David – the scenario you describe is an excellent one – I wish that I had thought to put that in the post!
Thanks for stopping by and thanks for sharing that.
Very useful post. where can i find more articles about this issue?