Life Insurance On a
Non-working Spouse

I am often asked about the rationale of insuring a non-working spouse. After all, life insurance is primarily used to replace an income, and since by definition a non-working spouse (NWS) has no income, is this an area to which resources should be allocated?

Even though a NWS generates no income, that doesn't mean that he/she doesn't provide value. And it is that value that should be insured.

Often times, a working spouse will say to me that an amount that can pay someone to come in and do what the NWS does would be sufficient. I believe that is terribly short sighted.

To provide my thinking on the subject, I will relate my personal story. I'm sure it's not unique.

When my wife and I started our family, I was just starting out in the insurance business. What seemed like several days a week, I left the house before all the kids were up, and arrived home after they were in bed. I justified that by knowing that my wife was there when they arose, saw them get on the bus, was there when they came home, supervised their homework while she was preparing dinner, read them stories and tucked them in bed.

Now, just to pay someone to do all that would be quite expensive, but that misses the most important point. My wife was clearly the most important person in my kids life. Had she died, I most definitely would have had to step up to the plate in her absence. That's not to say that I wouldn't have hired someone to help with the cooking and the cleaning. But in my mind, I would have had to be there to see them get on the bus in the morning, get off the bus in the afternoon, and put them to bed at night.

That obviously meant that I would have had to work fewer hours. Now I don't know about you, but when I work less, I tend to earn less. So I calculated the amount of insurance for my wife to be not only enough to pay for domestic services, but also to off-set my decreased income.

Just because this approach was right for me, doesn't necessarily mean it is right for you. Some of you may have options that weren't available to me. My parents lived in Florida, and would not have been available on a regular basis. But even if you have parents and/or siblings available to help, I still believe this approach, or some variation thereof, makes sense, as it gives you options, which is usually a good thing.

In the end, we each must do our own thinking on the subject.

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