Speak with an experienced advisor! Non Working Spouse life insurance considerations.
Why certain Non Working Spouse Should Never Consider Buying a Term Life Policy.
The Non Working Spouse life insurance caveat.
The Basics of the Non Working Spouse:
A non working spouse, is a spouse who either is not employed full time or is only employed for part of the time or for little financial benefit. Depending on the family earning situation, the family life insurance scenario is an important consideration.
Sometimes spouses are not able to work. Sometimes spouses choose to work in the home (such as a full time parent.) And sometimes spouses simply choose no to work.
Decades ago it was only the working spouse that purchased life insurance, but times have changed and changed dramatically.
Currently about 19.1% of families are supported by the Male only while about 7.1% of families are supported by the wife only. This is according the Department of Bureau of Labor Statistics.
Who is the Non Working Spouse?
The non working spouse, historically was the typical stay at home mom. However increasingly the non working spouse is the stay at home dad. However non working spouses do not have to have kids to choose not to work.
The Typical Non Working Spouse:
The typical non working spouse could either be non working mom or a non working women with no kids. This situation happens every day. A good general rule of thumb, is that both spouses, working or not, probably need life insurance, if they have children. The money can be used for all sorts of expenses and term life insurance is not expensive. If you are a stay at home mom or stay at home dad and want term life insurance, it is usually pretty simple.
The A Typical Non Working Spouse: The Reverse Breadwinner:
The newer and less typical situation is when the Dad stays home to care for the kids and chooses not to work. Although this may seem odd to some families, it is increasingly becoming the case. Purchaasing term life for a stay at home dad is usually just as simple as purchasing term life for the stay at home mom - with one caveat.
The one caveat to Stay at Home Dad's purchasing life insurance is that, assuming the mom and dad are the exact same age, is that since men live shorter lives, they can generally expect to pay MORE for life insurance than a woman of comparable age and health condition.
The Pseudo Non Working Spouse:
I can hear spouses asking it already - I work, but not either I don't earn that much or I don't work full time. This is the pseudo non working spouse. You work, but not a lot. Perhaps you get a small stipend for a non profit. Perhaps you volunteer at your child's preschool and your kid get entry for free or reduced cost.
There are numerous other scenarios that qualify as a pseudo non working spouse. Should these people buy term life insurance?
Summary of Which Non Working Spouses Should Definitively Purchase Term Life Insurance:
...with Children:
- You Have Kids and Not Enough in Savings to cover them through college and do not have local family that would be able to care for your kids for free.
- You have a financial debt that you would like settled in the event of an untimely death.
- You are not sure if your family is done growing or plan on having more children and wish to provide for them.
- Your Financial situation is not settled nor organized.
...without Children:
- The non working spouse is completely dependent on the working spouse for income.
- The non employed spouse is unable to work, due to an illness or a condition.
- You have a financial obligation or debt that you would like settled.
Summary of Which Non Working Spouses May Purchase Term Life Insurance:
...with Children:
- You have saved lots of money, but are unsure if it is enough.
- You know that you have saved enough money, but you still feel more comfortable with some simple term life insurance. In this situation it may make sense to consider a lower amount.
...without Children:
- You have saved the money that you will need, but you still feel more comfortable with having a term policy for your spouse. This situation also may be call for a lower amount of term insurance.
- Your working spouse prefers that you carry it, either for emotional or physiological reasons.
Summary of Which Non Working Spouses Should Probably Not Get Term Life Insurance:
...with Children:
- You have children, lots of money saved to support them, and a local family that can care for them in the event of an untimely death. You have spoken with a financial adviser and are certain you are OK.
- You just don't care.
...without Children:
- The non working spouse is able to go back to work at will in order to financially meet their obligations.
- You have all of the money that you need saved and invested. You have met with a financial adviser and you feel extremely comfortable about your retirement.
- You simply cannot afford term life insurance. No matter how you calculate it and no matter what you do, there is just not enough money to pay for it.
Special Considerations for Non Working Spouse life insurance:
Non working moms and dads have special considerations when purchasing simple life insurance. It is not as simple as procuring ten times your earnings. Since you have no earnings that is obviously not possible. A good general rule of thumb is to aim for less than the working spouse or parents current life insurance, say six times. Speaking with a licensed agent about this is crucial.
Another specific note is to consider having the working spouse purchase their life insurance first. Some underwriters will not want to allow more life insurance on the non working spouse than the working spouse.
There are numerous Non Working Spouse life insurance considerations.
