Years ago I got into an argument with a friend. He was a high-income lawyer whose wife had taken a break in her career to take care of their four kids. I asked if they had life insurance on her. He scoffed at me and said, “No, she doesn’t earn any money!” I was really surprised by this, given how busy she was and how many responsibilities fell to her.

After 23 years as a financial advisor and licensed insurance agent, I’m no longer surprised. I know how common his opinion is. Unfortunately, I was unable to convince him that buying life insurance on his wife was worth it. Today I hope I can convince you.

Too many people believe life insurance is only needed on breadwinners.

Why does anyone need life insurance?

I always say as soon as another person is dependent on you, you should think about getting some insurance. Most calculators designed to help you decide how much you need start with the question, how much do you make?

The idea is that if the breadwinner, let’s call him dad, were to die and thus his income stopped, the death benefit would provide money the family could use to pay their bills.

I totally agree the breadwinner needs to have life insurance – probably much more than they do right now. But even if dad has millions of dollars of coverage, that still leaves a big hole in the family risk management. Tying life insurance need to income perpetuates the myth that women’s unpaid work has no value. The perspective of the insurance needs calculators is not really surprising when you think about it. Raising children and caregiving in general is vital work to our society. And yet, although our culture claims to value family, such work is consistently undervalued. It is evident in the low wages of teachers, childcare workers and healthcare aides.

Money is an interesting thing. It is important to survival because it’s how we get the things we need – both our most basic needs and the things that make life more enjoyable – often we get the priorities flipped. We tend to value things based on their price tag. It’s a type of mental short cut we use, sometimes without realizing it. A $70 bottle of wine must be much better than a $17 bottle, right?

So, if a mother’s work in the home is unpaid, does it really have any value? Of course it does, it’s just a bit invisible. A study by Salary.com valued stay-at-home-moms’ work at a median salary of $178,000 per year!

An analysis from Oxfam in 2020 reported that unpaid work by women in the U.S. would be worth $1.5 trillion in 2019, using minimum wage per hour for its calculations. And I would argue that moms should make much more than minimum wage!
And yet there’s no paycheck, no dollars coming into the bank account for all the hours we moms work. No visual or tangible representation of the crucial value of what we do, which makes it easy to overlook in the broader financial plan for the family.

What would it cost to replace all the work done by a mom who dies prematurely?

Now let’s imagine the non-working spouse, let’s call her mom, is tragically out of the picture. Obviously, the family will be devastated – the emotional cost of losing a parent is real and lasting. But let’s look at the practical day-to-day impacts. Who will step up to do all the jobs a mom fills in a day, a month, a year? It’s a big list, as we know.

• Childcare worker
• Cook
• Housekeeper
• Laundress
• Driver
• Shopper for food, clothing, and everything else
• Coordinator of kid schedules and activities
• Supervisor of school expectations and homework
• Healthcare manager, scheduling and driving to doctor, dentist and wellness appointments
• Bookkeeper and bill payor
• Travel and event planner
• Communications specialist
• And probably 12-25 others I’ve forgotten!

One person had been doing all this. And now she’s gone. Is it realistic to think that the remaining members of the family can or will step up to do all of the jobs? That would be tough, especially if the kids are young. Dad may be working long hours to keep up his income.

Unless extended family steps in, most likely they’re not going to find someone to do it all for free. So, they’ll need to pay – probably more than one person. This of course increases the expenses of the household, with same income. And let’s face it, most American families don’t have much wiggle room in their cash flow already. 

What would life insurance enable?

Let’s imagine again that mom is suddenly gone. But this time a large check arrives in the mail a few weeks later. Everyone is devastated. Life will never be the same. And, there’s a pot of money available to help with the logistical issues.
Now it wouldn’t be such a stretch to pay someone to do some or all of mom’s jobs.
If dad wanted to cut back on work in order to do some of the home tasks himself, there would be money to replace his reduction of income. Or the insurance check could be used to pay off the mortgage and fund college savings accounts, which in turn allows dad to work less.

It’s possible that the stress on family members will increase costs for mental health and/or wellness services. Money in the bank means they wouldn’t have to deny themselves care.

One friend of mine took his kids out of school on a giant trip, and even hired a tutor to go with them so the boys could keep up with school, after the tragic death of his wife. After witnessing and caring for her long and painful illness, he decided this would be a balm and a bonding experience for them.

God forbid both parents die, having insurance on mom as well as dad means more assets to whoever steps into the custodian/caregiver role for the children. That is a huge obligation for someone to take on, and of course, you’ll want to ease the financial burden on whomever is looking after your precious babies.

As always, money allows choices, options, and flexibility. Money is NOT a cure-all for the situation. It never is. But having life insurance on mom can avoid piling a financial disaster on top of the emotional one.

How much insurance do you need?

How much insurance should you have? Probably a number that sounds really big. The answer, as with so many things around money, is “it depends.” What do you want the money to enable if, God forbid, you were gone? Here are some ideas on how to answer the question:

Goal 2

Pay off the mortgage to relieve that monthly expense.

How much do you owe on the house? What is the annual bill for taxes, insurance and maintenance?

Goal 3

Fund the college savings accounts

What type of school would you like your kids to attend, and how much of the bill do you want to cover? Then you can use a calculator like this one to come up with a number.

You can see how the numbers add up quickly. The really short answer is, it’s hard to have too much. Most people have too little. (By the way, while you’re doing this exercise, make sure to look at how much you have on your breadwinner spouse as well! It may be time for a top-up.)

Possible Hurdles:

My spouse and I don’t like to talk about this stuff!

Money is a common cause of stress and friction in marriages. Know that it’s normal! And you want to find a way to talk about it anyway.
On top of that, we humans don’t like thinking about our own mortality or possible disaster scenarios. Many of us end up avoiding actions like getting our will written and buying life insurance. (Go get your will done if you haven’t!!)

Try to take emotion out of it by focusing on the numbers and the financial risk. Hopefully, this article can help.

Conclusion

Think through what it would take to replace all the unpaid work you do for your family.

Be sure you’re talking regularly with your spouse about money and finances. One piece of that conversation should be disaster preparedness. Just like you stock up on food and supplies before a storm, know what you have in place in case disaster should strike. As you talk about the potential bad scenarios, include “what if one of us passes away?”

Money is not an end in itself. It is a tool that enables us to meet our needs and build the lives we want to live for ourselves and our families. If suddenly you were no longer here, wouldn’t you want choices, options, and flexibility for your family?