Life Insurance for the 'Non-Working' Spouse

The title of this blog alone could get me into hot water. For the record, I am cautious to use the term ‘non-working spouse’ because I truly believe the spouse that stays home with the children often has a more difficult ‘job’ than the ‘working spouse’ (just in case you’re reading this, honey). However, this is the term the life insurance industry currently uses, although I prefer work-at-home spouse.

If you have a young family and either you or your spouse stays home with the children, chances are good only one of you has life insurance coverage. And most likely, it is the spouse that works outside of the home.

This is what the National Association of Insurance Commissioners found earlier this year when they conducted market research on the subject. Here’s one of their findings:

• 64% of young families believe it is critical for both spouses to have life insurance. However, only 48% have purchased coverage on either spouse.

Life insurance protection is a ‘whole’ family affair.

While it appears reasonable to protect the income of the wage-earning spouse, it may not seem as important to do so for the non-working spouse. One reason for this may be that it can be difficult to financially quantify the contributions of a non-working spouse. At a minimum, you should consider the financial value of the following:

• Child care
• House care
• Other domestic services

Ask yourself what the annual cost would be to hire someone to perform the multitude of services your non-working spouse provides. Then multiply that approximate annual cost by the number of years you would need those services. Ask yourself whether you would quit your job and stay home with the children yourself, or hire out the day care, house care, etc. Proceeds from a life insurance policy could assist you with both options.

Life insurance company guidelines vary as to the amount of coverage a non-working spouse may purchase. For example, companies such as American General Life Insurance Company and Genworth Life Insurance Company will allow a match of the working spouse’s coverage up to $1,000,000. Protective Life Insurance Company will allow up to $3,000,000! Larger amounts are usually given individual consideration.

If this sounds all too familiar, please get started today. We can help you determine an appropriate amount of coverage for the non-working spouse in your family.