Life Insurance for the Homemaker

It’s arguably the most important job there is: motherhood. The challenges are great, the rewards are many, but most of them are not financial. So, just what is motherhood worth on the open market?

Not-so-Minimum Wage

In its ninth annual “Mom Salary Survey”, conducted in 2009, Salary.com attempts to answer that very question by polling more than 12,000 mothers. Based on the tasks they perform and time put toward each, the Salary.com’s online calculator estimates the salary a mother would be entitled to if she were paid for her time, effort and performance at over $120,000¹.

Uncovering a Disturbing Fact

More than a fun tool, the salary.com calculator uncovers a serious truth: it would be expensive to replace Mom. Certainly the emotional value of a mother is priceless. But if the unfortunate circumstance should arise where Dad needed to bring in a team of caretakers to perform the functions Mom once handled, the expense could be crippling. Still, so many women - both those who work outside the home and those who work within – remain chronically underinsured.

Generally, women who have paying jobs outside the home are more likely to have some sort of employer-sponsored life insurance. But relying solely on employer-sponsored coverage could be risky, especially in today’s volatile job market: Lose the job and you lose the insurance.

Stay-at-home moms are the most likely to be completely uninsured, due in part to the perception that life insurance protection is intended to safeguard against lost wages versus lost “value.” In the event of Mom’s death, Dad would still need to work full-time to support the family. Think what it would cost to hire a full-time maid/babysitter, chauffeur, tutor, cook and personal assistant to run the household in his absence. The younger the children, the more expensive round-the-clock help could be.

Why the Lack of Coverage?

Cost tends to be a concern when it comes to purchasing life insurance. In such cases, Term policies – those that only last a designated number of years (the term) – may be an affordable option. Rates are based on a person’s age, gender, health and other risk factors. For example, in 2008, it was estimated that a non-smoking, 40-year-old female in good health could qualify for $500,000 of coverage for about $300 per year¹. Consider this: the average 2008 cost of cable TV in the U.S. was $71 a month or $852 per year². Mom’s life can potentially be insured for less than half the cost of cable. Term policies could potentially be a reasonable short-term strategy, but the downside is that the coverage will end and you will have to reapply for coverage when you are older and possibly in worse health, most likely resulting in higher renewal premiums.

Permanent life insurance policies are another option. Permanent coverage remains in force throughout your lifetime without any required re-qualification so long as premiums are paid according to schedule. Policy types include Universal, Survivorship, and Variable life, among others – all with varying features best explained privately by a licensed insurance professional.

How Much Coverage is Enough?

According to the 2007 AXA Equitable Protection Report, on average, Americans between the ages of 25 to 65 have an insurance shortfall of nearly $180,000. Families with dependent children register the largest shortfall – upwards of $370,000.

Lack of knowledge about real coverage needs in case of death contributes to this alarming insurance gap. To determine how much insurance coverage your family needs, consider the immediate financial obligations that would arise if you died unexpectedly, including the cost of your final arrangements. Then, consider the long-term financial ramifications of not having your earnings – or in the case of a stay-at-home parent, the cost of replacing those duties with hired help. Also, figure in the cost of your mortgage and other long-term debt obligations and the cost of your children’s educations. A financial professional can help properly assess coverage needs to ensure your family has the appropriate amount of protection.

The Value of Life Insurance

Mothers are usually the nucleus of their family. They nurture and support each member and make daily sacrifices for the betterment of the people they love most. Surely, no mother intends to leave her family in financial distress in the event of her untimely death.

Life insurance is an important component of every family’s financial strategy, and may be much more affordable than you think. For more information about life insurance, the various types and things to consider when deciding how much life insurance is right for your situation, visit AXA Equitable’s Online Learning Center.

Useful Resources & Links:

1) Calculation for the national median salary of a stay-at-home mom of two children under the age of 18 based on
     Salary.com’s Mom Salary WizardÒ.
2) The Insurance Information Institute estimates that, in 2008, the annual premium for a 40-year-old female non-
     smoker would be about $300.00 for a preferred risk. “Term Life Insurance Rates Expected to Drop in 2008.”
     September 21, 2007.  www.iii.org.
3) Allbusiness.com/economy-economic-indicators/economic-conditions-recession
4) 2007 AXA Equitable Protection Report. The survey was conducted globally by AXA Group. In the U.S., 360 working and non working people aged 25-65 were interviewed, constituting a national representation in terms of gender, age, occupational status and region. For Informational Purposes Only. This is not investment advice.

AXA Equitable Life Insurance Company (AXA Equitable) (NY, NY)

Securities are offered through AXA Advisors, LLC, member FINRA, and SIPC. AXA Advisors, AXA Network and AXA Equitable are its affiliates.

Investments are subject to market risk, will fluctuate and may lose value.

Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from and independent tax advisor.

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