They’re so much more than just ‘people who stay home’
by Larry HazzardLawrence S. “Larry” Hazzard is Vice President, Head of Disability Product, Underwriting and Claims for The Guardian Life Insurance Company of America. He is responsible for expanding the Disability Income (DI) product portfolio and achieving a superior and integrated customer/client experience. Visit www.guardianlife.com
When talk of disability income insurance comes up, you and your clients understand how important it is to protect the breadwinner. Particularly in households where only one person earns an income, disability income insurance is critical coverage for those who want to financially protect themselves and their loved ones. Insuring that paycheck with DI coverage can help your clients feel more confident that their lifestyle will be better protected in the event they should become disabled.
But what about those families where one partner stays home? It’s important to provide financial protection for those individuals as well. Now more than ever, the role of the stay-at-home spouse can be critical. In response to the pandemic, many stay-at-home spouses with children have played the role of both homemaker and teacher, and some have even opted out of the workforce to assist their children with virtual learning. While he/she may not generate an income, their contribution to the family cannot be undervalued.
Why protecting ‘the heart of the household’ is key
Stay at home spouses are more than just the people who stay home. They are the pillars that keep the household — and the family — running smoothly every day. Managing the home is an important role that many spouses take on as their primary responsibility, and this role provides value to the household even though it does not generate a paycheck.
The stay-at-home spouse may manage childcare, cleaning services, medical appointments, and other household needs. Who will take on these tasks should the stay-at-home spouse become disabled for a long period of time? What would the working spouse do if that should happen? The working partner could suddenly face a number of new expenses, as replacements would likely need to be hired — because all those tasks still need to be done.
The cost is higher than many think
When it comes to the stay-at-home spouse, while there is no income to replace, the total value of the services they provide is quite high. According to Salary.com, if a stay-at-home parent were paid for everything they do, their median annual salary — taking into consideration all the services they provide — would be an astounding $178,2011.
In addition, the risks of disability are high and the financial repercussions can be devastating. In fact, one in four will become disabled during their working years2, and those long-term disability claims generally last 2.6 years3. Many individuals also don’t realize that almost 90% of long-term disabilities are caused by illnesses (vs. injury) such as cancer, heart disease, arthritis, multiple sclerosis, mental health issues and lupus4. What all these potentially debilitating conditions have in common though, is whether by illness or injury, the disability can become a long-term event requiring income protection. So, while we can’t predict the unexpected, we can help our clients better prepare for it.
New coverage is now available
A few insurers that have begun to recognize this unfulfilled need in the disability income marketplace now offer a Spousal Coverage Program. Here’s how it works: The program gives existing individual disability policyholders the ability to cover a non-income-generating spouse who does not generate an income and who tends to all matters of the home. If the non-income-generating spouse becomes disabled and can no longer perform their responsibilities as a stay-at-home spouse, the benefits under this program can be used to pay for resources to cover the stay-at-home partner’s responsibilities in maintaining the home and family. Benefits can be used for anything and are not just limited to paying for childcare, cleaning services, home health aides, or other new household needs.
Who is eligible for coverage?
The insurers who offer this coverage may do so as long as the working spouse has a certain level of individual disability insurance coverage in place. As you might expect, this coverage is generally available for clients who fall within a certain age range, and the benefit term is ordinarily defined, such as 5-10 years. And, as with most disability income benefits, there is an elimination period at the beginning of each occurrence of total disability (such as 90 or 180 days), when no benefits will be paid. Some firms may offer this coverage to those in traditional as well as same-sex marriages. As the advisor, it behooves you to understand your client’s household functions so you can provide them the most comprehensive coverage and align yourself with an insurer whose products have taken many lifestyles into consideration.
What this means for you
As a financial professional, your role is to position your knowledge and experience, and to provide robust and holistic solutions for your clients and their families. A disability income client can be a client for life, and you have built-in opportunities to engage that client throughout the life of their DI policy, giving you the ability to meet their holistic financial needs with other products. Spousal coverage provides that opportunity to build relationships with existing clients and to increase your book of business to include a household.
A new level of protection
When it comes to protecting a family’s finances, the emphasis has always understandably been on the breadwinner. But if there is a stay-at-home spouse devoted exclusively to running the household, it’s paramount to provide financial protection for that person as well. Because without the stay-at-home spouse, the breadwinner can suffer both professionally and financially. And, of course, the family will suffer.
Now, you can offer disability income protection for everyone in the household — and that can enable you to help your clients financially protect their families better than ever before.
1 Moran, Porsche; How Much Is A Stay-at-Home Parent Worth?, Investopedia, Updated Mar. 21, 2020 https://www.investopedia.com/financial-edge/0112/how-much-is-a-homemaker-worth.aspx
2 Social Security Administration Fact Sheet, December 2019
3 Council for Disability Awareness, The Average Duration of Long-Term Disability is 31.2 Months (Jan. 2016), https://blog.disabilitycanhappen.org/the-average-duration-of-long-term-disability-is-31-2-months
4 Integrated Benefits Institute, 2018 Health and Productivity Benchmarking, Long-Term Disability
Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA or provided by Guardian. BLICOA is a wholly owned stock subsidiary of and administrator for the Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state.
2020-111523 (Exp. 11/22)