Speak with an experienced advisor! AIG is one of the few companies that will consider writing up to $1,000,000 in term insurance for non working spouses. Many of their competitors have limits that are far lower.
AIG Non Working Spouses:
AIG, the American International Group, has great limits for non working spouses. In certain situations they will allow stay at home dads and moms or potentially even stay at home spouses (with no kids) to purchase a large amount of term insurance. They may allow you to go as high as $1,000,000.
There are lots of conditions to this. One of them that most insurers follow is in requiring the working spouse to have more life insurance than the non working spouse. In other words the working parent needs to have a term policy of their own. There are also lots of other underwriting criteria, please speak with an agent about this.
Now Working Spouse Life Insurance Calculations:
When people think of non working spouses, the often believe that refers to stay at home moms. But this is no longer the case. More and more are staying home and considered the non working spouses. A problem exists in the world of life insurance exists with underwriting these individuals.
Insurance companies generally limit the amount of life insurance that you can purchase based on your age and your income.
An example of this is if a given insurer were to limit someone to ten times their earnings. If they made $50,000 per year than they would be able to get $500,000 in term insurance. However with non working spouses how do you limit this?
The Two Types of Calculations for Non Working Spouses and Life Insurance:
Calculation Concept One: How much life insurance do you need:
Of the two calculations here, this one is simpler to understand. How much life insurance does the non working spouse require? Assuming you have children here (because its more common and easier to explain) how much does it cost to hire someone all that they do? This would include: Cooking, Cleaning, Driving, Volunteering, Bill Paying, Shopping. In a more affluent area this may consist of one or two year round nannys. Honestly perhaps $40,000 to $60,000 per year, ball park.
For others this could be a much lower number. Take this number and multiply by ten.
$60,000 per year X 10 Years = $600,000 in Term Insurance
Calculation Concept Two: How much life insurance will the insurer allow you:
Now the life insurer will run their own calculations based off of their underwriting criteria to determine how much life insurance they will allow you. They will look at the working mom who has abut $840K in term insurance but will deny the non working dad the $600K because insurer XYZ may limit non working spouses to only $500K.
In the end the limits to the non working spouse may determine which insurer they end up choosing. Keep in mind that there is nothing that requires the working and non working spouse from buying term insurance from the same carriers.
The American International Group Non Working Spouse Life Insurance Solution:
In this example we have shown that you need $600,000 in term insurance for the non working dad. But will the insurer that you have selected allow a non working dad a $600,000 term policy? AIG will consider it and this is why AIG is great with non working spouses.
Since the working mom already has $840K in term insurance which would be higher than the $600K than the Dad would probably be taken based off of our limited situation here. Keep in mind that there is lots more underwriting criteria that need to be met.
As you can see from the above example the AIG Non Working Spouse Life Insurance solution is a good one.
"Just to be 100% clear here - Whole Vs Term believes that both spouses, working or not, need to have life insurance if you have children. For those that do NOT have children you may or may not need term insurance."
About Life Insurance Calculation Methods:
For working Spouses: there are generally two different methods to calculate this:
Method One: The Old Rule of Thumb, ten times earnings method. Take ten times what you make per year. An example $30,000 per year multiplied by ten equals $300,000 in term insurance needs.
Method Two: The more nuanced life insurance needs and financial asset model. Formulate independently how much life insurance you may need and subtract what you net worth is. An example you need $50,000 per year until you kids are out of college in ten years, so $500,000. You have a net worth of $200,000. Subtract out $200,000 from $500,000 and you may want to purchase $300,000.
For Non working Spouses: We reviewed this earlier:
Consider what your yearly cost is to replace what you do: Driving, Cleaning, Etc and multiple by ten. Sometimes a calculation is easier had by multiplying by a lower version of the ten times rule for the non working mom or dad. Take the working spouses income ($50,000) multiplied by five so you might need $250,000 in term insurance.
About AIG:
AIG, AM Best Financial Strength Rating A, is one of the largest insurance companies in the world. AIG stands for the American International Group. They employ about 50,000 people worldwide and offer a wide arrange of financial services and insurance products. Their insurance products are not limited to life insurance. AIG does a great job with more open underwriting than numerous other carriers.
Conclusion AIG Non Working Spouse Considerations:
AIG Life Insurance is an awesome product. The company's underwriting criteria make them a great option for millions of Americans. They especially have great non working spouse limitations going higher than many of their competitors.
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