Life Insurance for a Non-Working Spouse
As a financial planner I’ve worked with quite a few widows over the years. Some of those widows were well prepared to handle their finances but most were not. After working with widows, I feel like I have a pretty good handle on how to advise them. But, recently, I’ve met three widowers and I was completely astonished by what I found. Below is the story of one of those widowers. Interestingly, the other two stories are similar.
John was 39 years old. He lived a good life. He was a deacon in his church, had a beautiful bride that he had been married to for 15 years and two fantastic children. He ran a small business that provided him with a very good income and allowed him to devote much of his time to serving others and spending time with his family. Then, tragedy struck. Jan's life was taken away by a drunk driver. John's life and the lives of his children were turned upside down. John had to deal with the loss of his bride of 15 years; the one person that meant more to him than anyone else in the world. His children had to deal with the loss of their mother.
John was (and still is) a great father. However, he made a terrible mother. John's wife was home every day when the kids came home. John was running a business and couldn't be home by 3 pm when the kids arrived home from school. It wasn't long before John began to realize that the children needed him to be there more often. Without parental supervision, they made poor choices, and they began getting into trouble around the neighborhood. Psychologists explained the children’s behavior as quite normal when faced with the loss of a parent. He was faced with a very difficult decision; the way he saw it, he had three choices.
1. Keep working and run the risk of his children getting into things they shouldn't be. John had always worked and figured he needed to provide financially for his children.
2. Stop working to be there for his children. The only problem, albeit a very large one, was that this solution left his family with no income.
3. The third solution seemed to provide the best of both worlds: he could run his business out of his home. Unfortunately, he quickly found that this wasn't the perfect solution either. It was difficult for John to run his business full-time and focus full-time on his troubled kids. Changing the location of where he did his business didn’t make any difference.
His decision was finally made clear after he checked his eldest daughter into a rehab center: he had to stay home and fully focus on his grieving children.
Now, I'm certainly not qualified to comment on the psychological damage that is created when a child loses a parent. However, I have observed that the mother’s death is often more devastating to the family unit. I believe there are usually several reasons for this. Two of the main ones being that, not only are mothers often the relational nurturer, but they are often the ones that run the household and keep everything in order. This is true even in households where both parents work outside of the home. In general, if a man were to try and combine running and organizing a household with working; it just doesn’t end well. My wife had gall bladder surgery a few months ago and I became father and mother to our three daughters (all five years old and under). Let’s just say I made it, but barely. According to studies, a man’s brain is incapable of multi-tasking; his left and right sides of his brain literally do not connect. Combine this with the fragility of grieving children and you can see why John made the choice he did.
Of course, John wanted to provide for his children financially, but he saw it was more important to provide for them emotionally and spiritually as well. John learned too late that although you can’t buy your children’s emotional or spiritual security, you can buy their financial security. How? How, could John and his wife have prepared for their family’s financial security in the event of her death? She wasn’t making an income, so, at first glance her loss did not leave a large financial impact. Because of their lack of preparedness, John had to use up most of his savings since he wasn’t earning an income. Three years of living expenses wreaked havoc on his finances. It took him three years to feel comfortable enough to go back into business. John is one of the few people I know that had enough money saved to last him three years. When I met John a few months back, it had been four years since he lost his wife. His children have adjusted quite well, but the financial impact has been quite devastating.
As a financial planner, I often recommend that couples carry a minimal amount of insurance on the non-working spouse; just enough to cover the cost of funeral expenses, daycare/nanny, cleaning service, etc. You see, I always viewed life insurance simply as an income replacement tool for a wage earner. That is, until I met John and the other two widowers. In my flawed thinking, John’s wife didn’t have an income so her death shouldn’t affect their financial quality of life. It was only after his wife’s death, when John was forced to choose between financial and emotional security for his children that one could see the intangible ways that her loss would impact his family’s quality of life. It wasn’t just their mother that was gone; it was the loss of life as they knew it. Children, especially those facing a tragic loss, crave consistency and stability; the loss of their mother rocked their world. You see, John had plenty of insurance on his own life. In the event of his death, his wife could have continued the full time care of his children while still having financial stability. Yes, the loss of their father would have hurt deeply, but their day to day lives would have, for the most part, remained consistent and stable providing a sense of security in an insecure time. Now, when I advise couples where one of them is considered a non-working spouse, I think of John and his children, and the difficult decision he had to make. I encourage them to make sure that not only will their family be financially secure in the event of either spouse’s death, but that they will be emotionally and spiritually secure as well.
In the three cases I’ve come across recently, each of the fathers quit their jobs for at least two years in order to help their children get acclimated. Therefore, I am now recommending that couples base their life insurance decision on the potential loss of income of the working spouse in the event the non-working spouse dies. And with insurance rates at all time lows, almost everyone can afford the coverage.