Buying Life Insurance for A Work-at-Home Spouse

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When a work-at-home spouse dies prematurely it is always emotionally devastating for the surviving spouse and children. There are, of course, many emotional repercussions of such a tragic loss to a family. But there is often a tremendous financial impact, as well.

During the difficult adjustment time, there is often a real need for someone to help out in caring for the children and home. Often, friends or relatives will step in to assist during the first few crucial weeks. But eventually, they will need to return to their regular lives — and the surviving spouse will need to return to work. At that point, the only recourse may be to hire professional services. And this could present a financial hardship.

The Value of the Homemaker

While everyone recognizes the vital role of the family homemaker, few people stop to think about the financial value of the services performed by the work-at-home spouse. These might include childcare, looking after the home, preparing meals, and many other time consuming activities, like carpooling, laundry and grocery shopping.

The cost of childcare for preschoolers can be as much as $10,000 a year, depending on where you live and often even higher for infants and toddlers. The financial equivalent of the vital services a work-at-home spouse provides can amount to many tens of thousands of dollars each year.

That's why it's important for a work-at-home spouse to have his or her own life insurance protection. It's hard enough for a family to deal with the emotional repercussions of losing a parent/spouse. They shouldn't have to grapple with the financial hardships such a loss can bring, as well.

How Much Life Insurance Do You Need?

There are no hard and fast rules for determining how much life insurance is enough, because no two families have exactly the same needs or resources. As a general guideline, the appropriate amount of insurance protection could equal the annual cost of replacing all these work-at-home services times the number of years before the youngest child is no longer a dependant.

Let's say you determine that the financial value of the services a work-at-home spouse provides for your family equals $50,000 a year. If your youngest child will no longer be a dependant in 15 years, the appropriate amount of insurance protection for the work-at-home spouse could be as much as $750,000, depending on other available income or resources. Some other things you might consider in determining an insurance amount include funeral costs, medical expenses, probate fees, estate taxes and inflation. Your insurance agent can help you determine how much life insurance you will need.

To calculate the amount of capital that would be needed to provide a specified amount of income for a fixed period of years (including interest earnings and inflation) please see our spouse capital needs calculator.