Friday, February 24, 2006

Insuring Mrs Cleaver...

And no, I’m not trying to be sexist, but rather to make a point:
Disability income insurance (DI) is often called “Paycheck Insurance.” The idea is that, if one is injured or ill, and is unable to work for an extended period of time, the insurance would kick in to help pay the bills and put food on the table.
Nowadays, many folks have such coverage through a group plan at work. Others have purchased it directly, which usually means a more appropriate coverage, but often a higher price, as well.
The amount of DI coverage that one can buy is generally based on two criteria: the nature of one’s job, and the size of one’s paycheck. In the case of a homemaker, it may be relatively easy to ascertain the first, but how does one determine the second? After all, there are no paystubs, W-2’s or 1099’s, no actual cash changes hands.
Yet there is obviously value in what the homemaker does. Determining that is essential. Harder still, however, is finding a way to insure it.
Years ago, I recall that Golden Rule used to sell a disability policy for Stay at Home Mom’s (SAHM’s). They haven’t had that available for many years, though, and the market itself has evolved. For one thing, there seem to be a lot more SAHD’s, which also alters the picture.
SAHS’s (Stay at home Spouse’s) can generally buy life insurance with no real problem. So why is it so difficult to find disability cover?
Think about the daily tasks typically performed by the stay-at-home spouse, such as child care, laundry, grocery shopping, bill paying, cooking, cleaning, etc. These services not only have an intrinsic value but also a real economic value to a family.” (Ibid)
Exactly so. All of those issues make it relatively easy to find life insurance. Don’t these same factors justify DI coverage, as well?
Kim Anderson, the author of the article, notes that “(t)raditionally, the DI industry has not recognized the economic value of the stay-at-home spouse for purposes of providing coverage. The reason for this is simple: Companies calculate eligible benefits based directly on a person’s income.” She adds that “(a) few companies now offer stay-at-home spouses disability income protection without a need for the insured to validate a source of income.
That last intrigued me, so I dropped her a note, asking about who is now writing this cover. To my delight, I received a prompt reply: After doing quite a bit of research, she and her associate determined that only Thrivent Financial is currently marketing this type of product. The challenge is that the plans are available only from a (relatively) small group of agents to a (relatively) small group of folks (Lutherans). However, she promised to keep me apprised if her further research turned up another carrier.
Somewhat disheartened, I conducted a little research of my own, confirming the lack of availability.
And yet…
A recent conversation with a friend gave me new hope. We look at a potentially useful way to solve the problem in Part 2.
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