It’s a call we get quite often and there’s no easy way do deal with it once the risk has been realized.  People generally purchase term life insurance in their 50’s and doing so, they are primarily concerned with replacing the income from the primary earner.  It’s pretty common for a couple to buy insurance on this one person which on the surface, is good life insurance, since the primary goal is to replace lost income for a period of time.  They generally overlook the other spouse if he or she is not working which can have very serious ramification later on.  Let’s take a look at buying term life insurance for the caretaker and how this can be a life saver later on.

Here’s how the call generally goes.  We’ll use an example of Harry and Sally.  Let’s say that Harry is the primary earner of the couple, not to veer into 1950’s stereotypes but we did use Harry and Sally as the names, after all.  This couple is now 68 years old and they bought 20 years of term life coverage on Harry back when he was 57.  So far so good and that’s a very common scenario we just described.  So where’s the issue.

Harry is disabled and requires quite a bit of care although he can still remain at home with the (considerable) help of Sally.  Sally passed away unexpectantly.  Now, it may be unwise to expect that a spouse (generally female since they live longer) can take care of the other spouse with all that entails but this is more a question in the Long Term Care arena.  Our issue is this.  Harry not only has to deal with the loss of his spouse, but the caretaking function she provided.  This is a huge issue.  How big?

The cost for a basic level of caretaking can run $5K monthly.  Yes, monthly.  It can be higher if you’re receiving this care in the home as Harry invariably was.  Harry is now forced to make some hard decision that might result in him having to find facility based care and moving out of his home.  So how can we use term life insurance to protect against the loss of this caretaking role that the spouse provided?

Look at getting some level of term life insurance coverage for the caretaking spouse.  It will likely be smaller than for the primary earner in the situation where one spouse earns quite a bit more than the other but you want to address or at least partially offset the situation above where the loss of the caretaker causes significant costs to the surviving spouse.  You can quickly run a term life quote for both spouses to see what the cost is and find the right blend of coverage and cost to address the total risk.  Purchasing term life for just the primary earner partially insures the risk and the whole point of insurance is to make sure you don’t have significant exposure one way or the other.  It probably makes more sense to reduce the primary earner’s coverage to buy some amount (keeping total cost the same) on the other spouse just in case.  This way, you never need to make the call above.