Unfortunately, our industry appears to be overlooking the disability income protection needs of millions of people.
Most Americans readily can tell you the approximate value of their car or their house. They also do a fair job of estimating the future cost of sending a child through four years of college and of what they’ll need for their retirement nest egg. Unfortunately, few have a good idea of their financial value to their loved ones.
Many insurers now believe that Human Life Value is the proper measurement of this value. It incorporates not only the financial value of a person at death–the value of one’s estate–but also the individual’s financial contributions over an entire career had he or she not died.
For a person working outside the home, it is easy to calculate the economic value to the household. Just take a person’s annual income, multiply it by the number of years the individual plans to work and account for increases in inflation or raises. Simple.
But what is the Human Life Value of a stay-at-home mother (or a stay-at-home father)? No income, so nothing, right?
It is said that the hardest and most underpaid profession in the world is that of the stay-at-home spouse. Yet, culturally, we don’t reward these individuals by assigning economic value to the work they do. No W-2 at year-end means no recognizable economic contribution. The stay-at-home spouse is considered priceless in many ways, but few couples really know–or protect–the financial value of that spouse.
Think about the daily tasks typically performed by the stay-at-home spouse, such as child care, laundry, grocery shopping, bill paying, cooking, cleaning, etc. These services not only have an intrinsic value but also a real economic value to a family.
In the world outside the home, a parent may be eligible to protect his or her income through disability income insurance protection provided by an employer’s group plan, individual contracts or a combination of both. But what about the estimated 5.4 million moms and 98,000 dads who stay at home?
Traditionally, the DI industry has not recognized the economic value of the stay-at-home spouse for purposes of providing coverage. The reason for this is simple: Companies calculate eligible benefits based directly on a person’s income.
Some companies are beginning to take a different approach, however. They recognize that even though stay-at-home spouses don’t provide income in the traditional sense, they make huge financial contributions to their families. Illnesses and injuries to these hard-working, non-working spouses wreak havoc with family finances. There is no good reason why these individuals should not be able to protect themselves against the financial hardship of a prolonged illness or disability.
A few companies now offer stay-at-home spouses disability income protection without a need for the insured to validate a source of income. Though offering only limited, short-term benefits, the coverage enables households time to recover or make other arrangements if the stay-at-home spouse becomes disabled. In addition, the coverage provides peace of mind enabling families to focus on healing without worrying about whether their lifestyle will be disrupted.
Source: Bureau of Labor Statistics