Addressing the Myth: Homemaker Doesn’t Need Life Cover

Buying life insurance is one of the most important financial decisions. Life insurance gives the much needed financial protection to your family when the life events turn sour due to demise of the working member. Though today it is more common to find women who are financially independent with careers, there are a significant number of them who choose to stay at home and take care of the house and their young children. In such families, it is usually only the husband who takes a life cover for himself as the housewife is perceived to have no monetary value. Since we usually associate life insurance with replacing lost income, the idea that a homemaker needs life insurance products may not seem as important. But it is a myth! Though there may not be a need to replace lost income, the economic replacement cost of a non-working spouse should never be discounted. The loss of the homemaker will create a number of financial needs that did not exist previously:  

Child Care: It is true that a homemaker does not earn wages like the primary breadwinner of the family but she/he provides a lot of domestic services. If you have very young children, there will be need of some form of childcare. You may opt for baby care centers but per month cost will be Rs 5,000 – 10,000 depending on the location at which the care is provided. Of course, if competent daycare is not available, nannies can cost even more. A family, with children aging two – five, deprived of the homemaker, can be forced to spend somewhere between Rs 10,000 – 20,000 per month till the time the children reach school age. Such a financial burden on an uninsured low/middle income group family can have devastating effect. 

Cooking Duties: Generally the homemaker cooks regularly for the whole family. Be it breakfast, lunch or dinner, all are prepared by perfection. If you need to hire a full time cook, the cost outgo per month may vary from Rs 5,000 – Rs 10,000 or even more.  

Domestic help: You should consider the expense of household cleaning, washing of garments etc. If you hire a full time maid servant, you need to pay anything between Rs 5,000 -10,000 depending upon your location.  

Emotional repercussions: Counseling services for family members should also be taken into account. Not only the homemaker does cooking, cleaning and babysitting, he/she is the heart of the home. Losing this valuable member of the home will have deep emotional impact on the other family members as the remaining spouse may not be able to handle on his or her own. The cost of paying for a counselor once the homemaker passes away may be go beyond your imagination. 

Re-settlement/transition costs: Life will not be the same upon demise of a family member. One possibility is that the breadwinner may go through deep stress and crisis that will result in the loss of a job. If it does, the family will need money to cover the transition into a new job or career. It may even be necessary to take a voluntary break from the work. Often after the death of a parent, the family relocates to be closer to the extended family as a way of providing direct care or at least closer proximity. That resettlement will obviously cause a cost outgo, and may also result in loss of wages or even reduced wages upon finding a new job in the new location.  

Providing children with a college education: This is probably not something most families think about when it comes to life insurance, especially when it concerns a homemaker. At some point, the children go to college for higher education and more financial outgo happens. In many households, where there is a homemaker, he or she takes up a job to pay for some of the costs of college for the kids. Often when the children become teenagers and the domestic responsibilities become less, the homemaker can start working outside the home for extra money. But if the spouse dies, that potential source of income will vanish. Having an adequate amount of life insurance for the homemaker can help to cover this important but lost source of income for college financing of children. 

Taking care of the obvious: Last but not the least, we often forget about funeral expenses. At a minimum, Rs 10,000 – 30,000 will be needed just to cover funeral and related expenses. But beyond funeral costs, there can be unpaid medical bills as a result of a series of treatments prior to demise. It is better to take care of the obvious through life insurance of the homemaker rather than stepping into an uncertain vortex of crisis. 

Notes: Expenses are denoted in Indian Currency (INR).