How Can We Help Financially Protect Families With A Stay-at-Home Partner?

When talk of disability income insurance comes up, you probably understand how important it is to protect the breadwinner. Particularly in households where only one person earns an income, disability income insurance (DI) is critical coverage for those who want to financially protect themselves and their loved ones. Insuring a portion of your paycheck with DI coverage can help you feel more confident that your lifestyle will be better protected in the event the breadwinner in your family should become disabled.

But what about those families where one partner stays home? It’s important to have financial protection for those individuals as well. Now more than ever, the role of the stay-at-home spouse can be critical. In response to the pandemic, many stay-at-home spouses with children have played the role of both homemaker and teacher, and some even opted out of the workforce to assist their children with virtual learning. While they may not generate an income, you cannot undervalue their contribution to the family.

Why protecting ‘the heart of the household’ is key

Stay at home spouses are more than just the people who stay home. They are the pillars that keep the household — and the family — running smoothly every day. Managing the home is an important role that many spouses take on as their primary responsibility, and this role provides value to the household even though it does not generate a paycheck.

The stay-at-home spouse may manage childcare, cleaning services, medical appointments, and other household needs. Who will take on these tasks should the stay-at-home spouse become disabled for a long period of time? What would the working spouse do if that should happen? The working partner could suddenly face a number of new expenses, as replacements would likely need to be hired — because all those tasks still need to be done.

The cost is higher than many think

When it comes to the stay-at-home spouse, while there is no income to replace, the total value of the services they provide is quite high. According to Salary.com, if you paid a stay-at-home parent for everything they do, their median annual salary — taking into consideration all the services they provide — would be an astounding $178,201.¹

In addition, the risks of disability are high and the financial repercussions can be devastating. In fact, one in four will become disabled during their working years², and those long-term disability claims generally last 2.6 years³. Many individuals also don’t realize that almost 90 percent of long-term disabilities are caused by illnesses (vs. injury) such as cancer, heart disease, arthritis, multiple sclerosis, mental health issues and lupus⁴. What all these potentially debilitating conditions have in common though, is whether by illness or injury, the disability can become a long-term event requiring income protection. So, while we can’t predict the unexpected, we can better prepare for it.

New coverage is now available

A few insurers that have begun to recognize this unfulfilled need in the disability income marketplace now offer a spousal coverage program. Here’s how it works: The program gives existing individual disability policyholders the ability to cover a spouse who does not generate an income and who tends to all matters of the home. If the non-income-generating spouse becomes disabled and can no longer perform their responsibilities as a stay-at-home spouse, you can use the benefits under this program to pay for resources to cover the stay-at-home partner’s responsibilities in maintaining the home and family. Benefits can be used for anything and are not just limited to paying for childcare, cleaning services, home health aides, or other new household needs.

Who is eligible for coverage?

The insurers who offer this coverage may do so as long as the working spouse has a certain level of individual disability insurance coverage in place. As you might expect, this coverage is generally available for clients who fall within a certain age range, and the benefit term is ordinarily defined, such as five to 10 years. And, as with most disability income benefits, there is an elimination period at the beginning of each occurrence of total disability (such as 90 or 180 days), when no benefits will be paid. Some firms may offer this coverage to those in traditional as well as same-sex marriages. It makes sense for you to consider the most comprehensive coverage and align yourself with an insurer whose products have taken many lifestyles into consideration.

A new level of protection

When it comes to protecting a family’s finances, the emphasis has always been on the breadwinner. But if there is a stay-at-home spouse devoted exclusively to running the household, it’s paramount to provide financial protection for that person as well. Because without the stay-at-home spouse, the breadwinner can suffer both professionally and financially. And, of course, the family will suffer.

_{1. Moran, Porsche; How Much Is A Stay-at-Home Parent Worth?, Investopedia, Updated Mar. 21, 2020 https://www.investopedia.com/financial-edge/0112/how-much-is-a-homemaker-worth.aspx}

_{2. Social Security Administration Fact Sheet, December 2019}

_{3. Council for Disability Awareness, The Average Duration of Long-Term Disability is 31.2 Months (Jan. 2016), https://blog.disabilitycanhappen.org/the-average-duration-of-long-term-disability-is-31-2-months}

_{4. Integrated Benefits Institute, 2018 Health and Productivity Benchmarking, Long-Term Disability}