As an experienced national life insurance broker, I see the same questions quite often. One I see repeatedly is with young families shopping for life insurance. Do we need to cover my wife? Why does a stay at home mom need life insurance? Or in gender fairness, why does a stay at home dad need life insurance? Isn’t life insurance just to cover the wage earner? The answer is “yes” and “no”.
I’ll tell you why a stay at home mom needs life insurance, she is very expensive to replace. See most consumers feel if the primary bread winner of the family has life insurance coverage everything is good financially as if no one else could ever die. The stay at home mom or dad as the case maybe, may not being earning income, but they are saving a fortune for the family. Most of us bread winners have a tendency to take our domesticated engineered spouse for granted. I have seen the job first hand with my wife of a quarter century raising three children and I never wanted the job. It is one of the most rewarding but toughest jobs on the market. Think about life without your spouse. Who cares for the children while you work? Who cleans the house? Who cooks the meals? Who runs all of those errands? Let’s look at replacing a stay at home spouse.
Here are some average costs (based on national averages) for help to replace some of the things a stay at home parent does:
Cost for a live in nanny $32,500 per year or
Day Care up to $11,000 per child per year
Housekeeping Service weekly $9,350 per year
Errand Service 4 hours per week $5,400 per week
So conservatively, the average household will spend around $40,000 per year with the loss of a stay at home parent to keep the household running. Now using the same rule of thumb that we use to purchase life insurance on the primary wage earner which is ten times income, the average family will need $400,000 in life insurance to cover these expenses in case of an untimely death. The concept is to invest the lump sum benefit and draw $40,000 per year to recover the new costs to the family. Depending on the age of the children, I would recommend a $400,000 term life for either 20-25-30 years to cover this financial deficit. For example, a healthy 29 year old stay at home mom of two children ages 3 and 5 years old can purchase $400,000 of 20 year term life insurance for approximately $16.00 per month. This equates to a nice lunch out alone once per month. It is just too affordable not to cover this risk for about $.50 cents per day.
We recommend using an experienced independent life insurance broker to shop the market for the best product at the best price for your unique situation.
“It’s the best job in the world, and the toughest job in the world all at the same time.”—Angela Kinsey
Image by Boians Cho Joo Young at www.freedigitalphotos.net
Tim Wilhoit is owner/principal of Your Friend 4 Life Insurance Agency in Nashville, TN. He is a family man, father of 3, entrepreneur, insurance agent, life insurance broker, salesman, sales trainer, recruiter, public speaker, blogger and team leader with over 27 years of experience in sales and marketing in the insurance and beverage industries.
I am reminded of the saying from Oscar Wilde, ‘The skeptic knows the price of everything and the value of nothing.’ There is so much intrinsic value with a stay at home mother/spouse that economics cannot measure. The improved self esteem of children, security and parental control in the home are all intangibles in the life insurance equation; however, the answer to this question is yes. A stay at home mother/spouse needs life insurance for a variety of reasons. First, the burial expense needs to be addressed, along with the debt incurred by the deceased. It would be a benefit for the home to be free and clear from debt along with the different functions that were performed by the deceased that would have to be delegated out to the private sector in her/his absence such as child care, cleaning, laundering, and cooking. Top flight financial professionals always calculate the value of stay at home spouses. The economic value of a stay at home spouse has been calculated to be in range of $50,000.00- $80,000.
James, you make some very valid points I did not mention in my article. I really appreciate you sharing them.
They sure do! Many times families forget
All the things mom do on day in day out basis. Mom’s do the shopping, nurse maid,
Dietician,they buy the groceries,takes kids to doctor,the dentist,baseball practice,volleyball practice,cheer,dance,pkay datesand mom does the cooking for family.
Mom needs just as much life insurance as Dad. When Mom passes away the head of household (Dad ) will either have to pay someone to help with these duties as he trys to juggle his work schedule.
Yes,Mom’s do need life insurance.
Couldn’t agree more Mario, thank you for sharing.
Stay at home moms are usually MORE valuable than their working counterparts. Just add up all they do, their hours, and what it would cost to replace this. Not to mention it just makes good sense to insure both parents.
Colin, great points! Thank you so much for sharing.
Yes she does! Risk is an ingridient of every activity or event. Not all can be retained considering expenses that come with. Remember we always want to avoid loss.Transfer of these risks is a necessity. She too needs to enjoy the benefits of Life insurance.
Thanks Tim for leading the discussion!
Kind regards,
James
Yes, she has a very IMPT Job, you can not pust a price on. Did you have play for child care it not cheep.
put a price on!!!
Although many Americans have more pressing financial priorities than life insurance, everyone still undervalues it. We all need life insurance; the bread winner, the house spouse, the kids, and in some homes, even the dog.
I can’t imagine any circumstances under which a stay at home mom would NOT need life insurance. What a huge loss and cost to the family if something happens to her; the cost of raising just one child is $241,080, according to money.cnn.com. And a single mom definitely needs life insurance.
Susan, that is an excellent point that I did not think of as well. Thank you so much for sharing it.
Great article! The first I’ve read where someone, somewhere attempts to put an actual dollar figure on a profession that doesn’t have one. As the article states, $40,000 does seem conservative, but the four parts of the formula can be used just about anywhere! Adjust numbers accordingly, you’re all set. Thanks for the article Tim!
Jed, thank you for the kind words. I am glad you found my article useful. Thank you for sharing.
Only if she is 98.6 and verticle (above ground). Thanks for the smile
Stay Home -vs-Working Mom’s Salary
http://www.salary.com/2014-mothers-day-infographics/
My rule of thumb has always been no less than 50% of the coverage on the working spouse. Usually not term insurance. The ‘Stay at Home Mom’ is usually younger and in good health. Permanent/whole life can be over funded for multiple uses and needs.
Anxiety management too requires Life insurance. Any loving parent cares about the economic welbeing of the dependants after they die.
Stay at home moms/spouses not only need life coverage but in most cases they are the financial decision makers in the household. A good question to ask the working spouse is who will do the things the stay at home spouse does.if they can no longer do those duties? If this is going to involve outside resources to take over these responsibilities, where will the funds come from, life insurance or savings?
Stay- at-home moms may have no income and are depending on someone’s income to sustain the family and all other expenses associated with it. Perhaps, a Bread-winner spouse, What if he dies, then the stay at home moms are in major trouble therefore,they most definitely need to be insured just like any working moms, spouses etc. So if the Stay-at -home mom dies, then the Life insurance death proceeds will help the husband and family continue life and avoid hardship. At least, the working moms are insured most of the times through their employer’s group policy whereas the Stay- at- home moms depend on the breadwinner’s income to buy Life Insurance. Life insurance is a vital part of every household financial planning, salaried or non- salaried. It is income replacement.
Why Life Insuranceon the Wife?
To help pay off the mortgage
To offset the estate tax
To pay the cost of last illness
To provide a charitable bequest
To provide a “housekeeper fund”
To provide a dowry for the daughter
To pay for her last expenses in old age
To help with the children’s education
To supplement her husband’s retirement income
To help a son or a daughter in the first, low-income years of marriage
To supplement Social Security old age income if her husband dies first
To supplement Social Security after her husband retires until payments begin
To provide cash for a trip she’d like to take when the children are grown
To continue retirement income if husband’s funds runs out at his death
To give a son or a daughter a memorable wedding
To offset loss of income tax savings
To do something for grandchildren
To help her husband retire earlier
To give a son or daughter a start in business
To provide a safe investment
No one has a firm grip on life, of who will be the first to die in a family or life in general because sickness and death favors no age or gender and it could happen in a million ways and at any given time therefore, we must all face reality and be prepared to take care of the ones we love that we are leaving behind, when the time comes. This is my reason why I feel that there should be life insurance on Stay at home wives. After all, WE ARE ASSETS TOO. Joaquin “Duke” Wilwayco, you have listed in more details other reasons why there should be Life Insurance on Wives.
Stay-at-home moms are home managers who have an economic value based on the services they provide and cost savings they bring to the family. I can certainly attest to this as one who found myself as a widower with 4 young children at age 29. Think about increased food costs, child care and maintenance, etc.
Now, as advisor I strongly recommend insurance cover for stay-at-home moms (or dads) to avoid situations like mine.
Gail, Duke and Riquen thank you all for sharing your excellent points. This is a very valuable discussion for new agents and veterans alike. Grateful!
Don’t Forget CI coverage? 1/3 of every women diagnosed with cancer & 1/5 diagnosed with breast cancer! Great article Tim!
JR, that is an excellent point as well. Thank you for sharing it! I appreciate the kind words.
Yes, stay Home Mom needs life insurance, they need life protection because they are on 24/7 duty. Every one needs life insurance for the security of their love ones.
Very good article and very true, thank you for sharing!
Fully supportive, as are my clients when this exact rationale is presented to them.
Really Insightful
Thank you for Sharing .
Certainly they do. The cost to replicate what a stay at home mom does would be thousands of dollars per month. Getting clients to realize this fact is the challenge.
Stay at home Dad’s too. Sure, there’s not near as many of them, but, there seem to be more & more of them every year. I’ve run into several.
Without a doubt, Yes. I agree with Roger in that getting clients to see this reality is a bit challenging.
Absolutely! The stay at home Mom is impossible to replace and it will take more than one paid person and an army of family and friends to help out if she dies. Providing for the continuum in the home will be expensive as well as time consuming and frustrating, need to be prepared.
I had a friend who lost his wife and had to take on added responsibilities at home. He also was very depressed for two years and was only able to work part time. His income reduced from 50,000 to 30,000 a year along with the added stress. It convinced me that life insurance is necessary for both the bread winner and the care giver.
Angelo, that is such a great point. I too had a client years ago lost his wife and could not work for situational depression. Life insurance can help out in so many ways, allowing the family time to grieve. Thank you for sharing.