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How Much Life Insurance Do Stay-At-Home Spouses Need?

Hint: Have your clients itemize all the roles their loved ones fill.

September 4, 2008
Sponsored by Prudential Association and Affinity Marketing

Your clients may be unsure of how much life insurance their spouses need — especially if their loved one doesn’t work outside of the home or earn an income. Their first inclination may be that a spouse who doesn’t bring in a paycheck may not need any life insurance. But if you encourage them to consider the hours a stay-at-home spouse spends caring for the family — preparing meals, washing dishes and clothes and running errands, among other tasks — you should be able to help them realize homemakers could be considered the CEOs of their families. As such, they would certainly need life insurance coverage.

Compensation professionals, who base their findings on average incomes paid to workers who perform comparable jobs as an at-home spouse estimate such a salary could range anywhere between $40,000 and $100,000 — and that’s without overtime. Although they may not have hard-and-fast incomes to protect, stay-at-home spouses do impact a household’s bottom-line. That’s why you need to stress to your clients that homemakers shouldn’t be left without life insurance coverage, and purchasing the right amount of coverage is important in helping to preserve your clients’ lifestyle. Some financial professionals recommend an insurance amount between five- and 10-times the amount of income. Replacing an at-home spouse’s calculated “income” could mean a minimum of $200,000 in coverage.

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Remind your clients that if their spouse died, an adequate insurance amount may allow them to afford the household help their family would require. For example, if your client’s stay-at-home wife died, her family may have to pay for childcare, which can cost thousands of dollars a month, as well as for transportation to and from school and extra-curricular activities. If the wife spent just four hours a week in the car transporting the kids, that bill may add up to over $3,000 per year. If she spent another six-plus hours each week washing, folding and ironing her family’s clothes, that may be another $3,000 each year for laundry services. Paying someone else to handle the family’s housekeeping chores and meal preparation could cost your clients upwards of $22,000 every year. Plus, the costs continue to mount when you consider the other roles stay-at-home spouses fill.

It’s clear that besides the devastation of losing a stay-at-home spouse, a client’s family would also have to deal with additional expenses. Both your clients and their spouses play an important role caring for their fam — ilies and running their households. Remind them to make sure that, should the worst happen, their lifestyle would be protected. The first step is to make sure both your clients and their loved ones have the right amount of life insurance.

IFS A154165 Ed. 8/08

Provided courtesy of The Prudential Insurance Company of America, Newark, NJ.