Explained: Why life insurance is a must for stay-at-home housewives, too

The spouse's economic value can be arrived at by estimating the cost of outsourcing such services

Zero. Zero is the human life value (HLV) of housewives, househusbands, or stay-at-home parents, who have no income and do not contribute to the household financially. HLV is a finance term that helps you calculate the monetary value of your life, based on your income, savings, and liabilities, to assess the amount of life insurance you need.

No wonder, as Ranjit Dani, a Nagpur-based certified financial planner (CFP), says: “Many believe there’s no need to buy life insurance for the stay-at-home group. With no income, there won’t be any financial loss on their death. But there is certainly merit in getting life-insurance for the non-working spouse. Theirs is certainly an economic value to the non-working spouse.” 

Dani is not the only one. A few days ago, the Supreme Court said: “Housewives are an invaluable unpaid resource and not unproductive!” 

Pankaj Mathpal, a Mumbai-based CFP, says: “A homemaker in an average middle-class family in urban India saves Rs 45,000-50,000 a month of the household income for the various tasks he/she performs at home.” They wear many hats, chauffeur to chef, and everything in between. They don’t pull off a six-figure income, but provide valuable service.

Aalok Bhan, director and chief marketing officer, MaxLife Insurance, says: “What most of us often forget is that even if by definition the housewife may not be the family breadwinner, she is a book-keeper, an expert at household management and budget maintenance, and plays a huge role managing the domestic finances, which would be considerably affected in her absence and would also alter the standard of living of the family.”

A survey called “Max Life: India Protection Quotient” found women-homemakers did not feel the need for term insurance. Close to 68 per cent of women who are aware of term plans perceived that term insurance was only for the breadwinner of the family. But, one reason why that’s not true is the shrinking size of the modern family.

Dani says: “If you do not have a support system in place, have a net worth of Rs 10-20 lakh on a salary of Rs 1.50 lakh or less per month, and have a few loans to repay. If your spouse dies, you will need to come up with Rs 40,000-50,000 a month to hire professionals to manage the home and children. This will put your finances under immense pressure; you need to buy life insurance for your stay-at-home spouse.”

Experts say you will need Rs 4-6 lakh to meet your expenses a year for the next 10 years or so till the children become independent. Thus, Rs 20-50 lakh cover is good enough.

Mathpal says, “Due to moral hazard risks, it’s not going to be easy to get a stand-alone term life insurance policy without any income.” After all, instances of murder to get insurance cover have come under scrutiny in the past.

Mathpal says: “Ideally a term plan is the first choice, but a low-premium endowment policy is good enough. A whole-life policy is not suitable in this case, and money-back policy and Ulips have high premiums. Choose an endowment plan that offers a term in accordance with your needs.” 

There are no stand-alone term policies for the stay-at-home spouse. But a few insurers offer a term plan for housewives if some conditions are met. For instance, the housewife has to be a graduate, and the spouse has to have life cover of at least Rs 1 crore. However, there wasn’t any cover for males. Everyone often devalues the stay-at-home spouses’ financial role in their family. Nobody could even take the place of the housewife, househusband, or stay-at-home parent. But, coming up with the money will help during the worst times in the family.