Fall 2011 | Volume 109 | Number 661

Planning for the Unthinkable

All Photography by Andy Wakeman

Even parents who don't bring home a paycheck need life insurance for their family's sake.
by Laura Putre

When his first wife, Cathy, died of an aggressive brain cancer in 2006 – less than three weeks after she was diagnosed, Michael Spehn found himself in an incredibly difficult situation. At the same time as he needed to grieve, Spehn was weighed down with practical worries about managing his household and caring for his children as a newly single parent.

The couple didn't have life insurance coverage for Cathy, a stay-at-home mom. Her death meant that all the logistics of daily life now rested with Michael.

"It was idiotic of me, but my thought was that my wife stayed at home with the kids – she didn't bring in an income," says Michael. "That was so short-sighted and foolish." It ignored the fact that Cathy spent much of her day doing the work of running their home and family – child care, cooking, paying bills, laundry, driving the kids and more.

With Cathy gone, Michael realized that "either I was going to have to do that and take time away from work, or I was going to have to pay someone to do it. Either way, it was going to cost us a lot of money."

The proceeds from life insurance could have helped. The average cost of hiring people to do what a stay-at-home parent does for "free" runs about $50,000 annually, according to the U.S. Department of Labor.

To keep his household together, Michael ultimately decided to quit his travel-heavy job and start his own business. But without the financial cushion that the proceeds of a life insurance contract could have provided, Michael found himself financially stretched, caught between the demands (and cash flow challenges) of a new business and the practical needs of his household.

"We almost lost the house," he says.

Mom's Contribution: Easy to Underestimate

Michael Spehn's story might sound extreme. But it's not an anomaly. An estimated 17 million American households with children under 18 don't have enough insurance, according to a 2010 Life Insurance Ownership Study from the Life Insurance Market Research Association (LIMRA). And across the board, wives are less likely to have coverage than their husbands. LIMRA's research says that 74% of husbands have some type of life insurance, while only 66% of wives do.

"I think a lot of people just underestimate the value of a stay-at-home spouse and what they actually do," says Grace Rossman, a Thrivent Financial representative in Sturgeon Bay, Wisconsin.

Rossman says that many people, when considering coverage for a stay-at-home spouse, think only of expenses like a funeral service. The idea of life insurance for a nonworking spouse is "still widely misunderstood," she says. "And of course when you've got Mom at home with the little kids, she herself is underestimating how important she is and the value of what she's doing. You can see how it turns out to be something that people need us to talk to them about."

Just as the Spehns did, a couple might say: "She doesn't make any income; we don't need to replace any income," says Rossman. But they do need to figure out what it would cost to hire someone to do the stay-at-home spouse's unpaid work, which can be considerable.

Rossman mentions two instances where Thrivent members had insurance for the stay-at-home spouse, giving the surviving family some breathing room as they adjusted to their new normal. In the first, the wife died, leaving behind a husband and six children. "The oldest child was a teenager; the youngest was a kindergartner," says Rossman. "He had a houseful, but they had enough coverage in place that he was able to hire someone to be full time with the kids."

In addition, he had enough coverage to take the kids on family trips where they could grieve together and move on with their lives. "It was a tragic loss," says Rossman, "but it could have been much more tragic had he been in a situation where he had to be working overtime just to make ends meet so that he could support all of the kids and have help at home."

In the second family, the three children were young adults when their mother died. The father chose to put the money toward furthering their college educations. "It was a legacy that she left behind," says Rossman.

Practical Considerations

Rossman says that when she talks to families about coverage, she considers how old the children are. Families with younger children will need more money to cover child care expenses, which can be almost $19,000 a year for an infant at a day care center, according to a July 2010 report by the National Association of Child Care Resource and Referral Agencies.

"When I talk to people about it, I take a look at what it would actually cost for them to have their children in full-time day care, plus have some sort of homemaker service in the house," Rossman says. "We go with that figure, and then we calculate how many years before that child could be independent enough to be at home without day care or a caretaker."

Of course, once kids start elementary school, there may be other expenses to consider, from soccer and swimming to music lessons and tutoring, says Julie Halgren, Thrivent Financial's director of protection product marketing. Working parents will likely also need child care during summer vacation or school breaks for their school-age children. "People always think once kids are out of diapers they'll get cheaper, but that's not the case," says Halgren.

She recommends stay-at-home spouse coverage for anyone who has children living at home or at college. "Don't undervalue what you're bringing to the family," she says.

Small World

In 2007, Michael married Gina Kell, a family acquaintance who lost her husband to cancer three months before Cathy Spehn died. The family now lives in Rochester, Michigan. In contrast to Michael and Cathy, though, Gina had found herself in a much better financial situation when her first husband, Matt, a general sales manager at a Detroit television station, died. They had coverage through Thrivent Financial not only for Matt, but also for Gina, who was a stay-at-home mom. "We did a lot of planning ahead of time – well before cancer entered our lives," Gina Kell Spehn acknowledges.

It proved to be time well-spent. "You can't even imagine how much easier it was, knowing that I wasn't going to have to run out right away and get a job," says Gina, now a speaker and co-author with Michael of The Color of Rain: How Two Families Found Faith, Hope, and Love in the Midst of Tragedy (Zondervan, 2011). "We were going to be able to cover all of our expenses, and we were going to be OK even in the long term. That was a huge burden lifted off us."

Michael and Gina both have individual coverage now, and Michael tells everyone he knows to insure both spouses. "My advice is that if you have kids, run – don't walk – to someone you trust," he says. "For us, it was a Thrivent Financial representative in town. God forbid if your spouse passes away. You will not want to run off to work. You will not want to question, 'How are we going to pay for everything?' Even if you remain in your same job, all of the things that your spouse provided for your kids will have to be provided by someone else.

"Every human being says, 'Oh, that won't happen to me,'" Michael says. "Well, I was the person it happened to, and I can tell you from experience that not having a financial cushion made an unbearable situation even worse."

What’s a Stay-at-Home Parent Worth?

Source: U.S. Department of Labor’s 2010 National Occupational Employment and Wage Estimates

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