Stay-at-home moms (SAHMs) have unique life insurance considerations. The value you bring to your family is priceless, yet you don’t necessarily earn an income. It can be difficult to determine if (and how much) life insurance is necessary to protect the contributions you make to your family. Often, insurance agents will recommend a client purchase life insurance to replace a salary. What should you do if you don’t earn money?
In essence, you are paid in hugs and kisses instead of paychecks. By deciding to be at-home with your children, a gap is created in the value you add to your family and the lack of monetary representation of that value.
While a stay-at-home mom isn’t compensated for her work … it would be expensive to replace all those things she does. —Marvin H. Feldman, President and CEO of Life Happens
To be certain, SAHMs need life insurance.
Here, we will discuss:
- Term Insurance
- Face Amount
- Policy Length
- Paramedical Exam
- When To Apply
- Independent Agent
What is term insurance?
Term life insurance pays a benefit in the event of the death of the insured for a specified period of time. Policies are typically for periods of 10 – 30 years.
Highly affordable, term life insurance is basic and an excellent fit for most people who have loved ones depending on them. The death benefit ends when the term ends, and the policy owner will then need to decide at that time whether or not they want to renew the policy.
How much life insurance should I get?
Insurance agents frequently work with individuals who are employed because life insurance is often described as income replacement in the event of loss of life. A general rule of thumb is to multiply your annual income by 10 to determine the amount of life insurance to purchase. Where does that leave SAHMs, who often don’t have an income?
There’s no doubt that SAHMs bring tremendous value to their families.
There are intangibles that cannot be replaced financially, of course, but the person at home provides an extraordinarily valuable service to the family. Life insurance is definitely something to consider. —Jeanne Salvatore, Insurance Information Institute
Salary.com creates an annual report of the monetary value of a SAHM. Their most recent release was in 2014 and described a mom’s contribution to the family to be worth $118,905. Wow. Using those numbers, the recommendation for a SAHM’s term insurance policy would be just over $1,000,000. At the end of the day, families must decide on a number they are comfortable with.
What can life insurance proceeds cover?
While it’s about as fun to think about as watching paint dry, it’s important to know that life insurance proceeds can take care of many of life’s essentials. Consider the following ways proceeds can keep a family functioning if tragedy were to happen:
- Education expenses of children
- Funeral costs
- Continue a family business
- Outstanding debt, like credit cards, student loans and a mortgage
- Living expenses
- Inheritance for children
- Charitable contributions
What length of policy should I purchase?
You want your policy to last as long as your needs. Additionally, a term policy can be cancelled at any time without paying penalties, making it potentially worthwhile to purchase a longer term. Most consider some or all of the following factors when deciding on what length of policy to purchase.
How many years until:
- Estimated retirement
- Children are out of the house or have graduated college
- Outstanding debt is paid off (i.e. student loans)
- Mortgage is paid off
How much will insurance cost?
Term life insurance is surprisingly low-cost. Age, health, lifestyle and size of benefit are the primary factors affecting your premium rates. For a fraction of the price of a daily latte, most SAHMs can purchase appropriate term life coverage. Here’s an example:
- Healthy SAHM Mom, 35 years old, children ages 10 and 12. Annual worth (monetary value for all that you do) of $100,000.
- Term policy for 10 years (until youngest child is out of the house) for $1,000,000 (10x your annual worth).
- Monthly cost of $18.60.
What is the process to becoming insured?
Securing term life insurance is easier than you think. Insurance Happens specializes in assisting families with at-home parents find appropriate coverage.
It’s clear that the process is simple and straight-forward:
1. Decide on the amount of coverage you need.
2. Fill out the free quote on our website.
3. An insurance agent will contact you to finalize the application process.
4. Complete a paramedical exam, usually in the comfort of your own home.
5. Paperwork will follow. Typically, this is accomplished online.
6. Life insurance contract will be delivered to you.
7. You are insured! Feel good about doing something super responsible!
What is on the insurance test (paramedical)?
Of course this isn’t the type of test you can study for, but it does help to be aware. Quick and straightforward, the paramedical exam is usually completed in the comfort of your home and typically takes only 20-30 minutes.
The physician will take a urine sample and a blood test, which will show underwriters information relating to your current wellbeing. —Caroline Hansen, MD, Georgia Medical Monthly
Here’s exactly what you can expect life insurance carriers to look for in the samples your provide:
1. Cholesterol – a waxy, fat-like substance found in all cells in your body. Elevated cholesterol levels are connected to cardiovascular conditions, including stroke. Generally, insurance companies are looking for total cholesterol numbers to be under 200.
2. HDL – high density lipoprotein. Think of HDL as the “good” cholesterol. The higher your HDL, the better. It acts as a scavenger to collect cholesterol from your bloodstream and delivers it to your liver to be broken down.
3. LDL – low density lipoprotein. LDL is considered “bad” cholesterol. It causes arteries to harden by building up along the walls. The lower this number is, the better.
4. Triglycerides – a type of fat found in your blood. Too much of it raises your risk for heart diseases. Ideally, you’ll want your levels to be under 150.
5. A1C levels – are related to diabetes. The a1c test measures the amount of sugar in your bloodstream for the last two months or so. The higher your a1c levels, the more at risk you are for diabetes.
6. Diuretics – insurance companies look for these in your bloodstream because it could indicate that you’ve been receiving treatment for high blood pressure.
7. Total Protein – elevated protein levels are usually associated with kidney function issues.
8. Liver – tests include Alkaline Phosphatase, AST, ALT, and GGT. Elevated levels of these tests can indicate liver function problems.
9. Albumin and Bilirubin – additional liver tests. Albumin is a type of protein in the blood, while bilirubin is a by-product of the breakdown of red blood cells. Decreased albumin levels and elevated bilirubin levels are associated with poor liver function.
10. Globulin – another type of protein in your blood. Elevated levels can mean infection or immune system issues.
11. Pancreas – tests will look at blood sugar levels and specifically, something called fructosamine, which is connected to uncontrolled diabetes.
12. Further tests – life insurance companies will likely test for HIV, cotinine (a by-product of tobacco use), and possibly an EKG.
Keep in mind the exam is strictly confidential. Test results will take a week or two to process. You will receive a copy of your results.
When should I become insured?
The best answer is now.
There won’t be a perfect time to initiate the process. Life is busy. The sooner you take care of your life insurance needs, the better. We highly recommend not waiting until you improve you lifestyle, stop smoking or lose weight. Remember, you can always apply for new premium rates if your health improves. And, not to sound dark, but there are too many instances of families that put off securing life insurance until tragedy has already happened.
Our message to the public is simple: If you’re one of the tens of millions of Americans who lacks adequate life insurance coverage, act now before it’s too late. —Robert Kerzner, president and CEO, LIMRA
SAHMs, it is abundantly clear you can never be replaced. Still, it’s the right thing to do to protect your family. Your future self will thank you for completing a mildly inconvenient process.
Why should I work with an independent agent?
An independent agent is one that represents multiple carriers and is not held captive to a particular life insurance company. This means you will receive multiple quotes from multiple insurance companies. You can choose which life insurance company you’d like to apply with and the decision-making power is in your hands.
Your best interest is at heart. No stereotypical salesman, pressuring you to make a purchase.