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Should You Buy Life Insurance for a Non-Working Spouse or Partner That Isn’t the Primary Breadwinner?

  • Jan 16
  • 8 min read

One of the most common mistakes that physicians make when making decisions about purchasing life insurance is not thinking about whether or not they need to buy life insurance on a spouse or partner that is not generating income. There are often questions or comments about this in our online physician communities. While many doctors have spouses that don’t contribute to the family’s finances monetarily or earn significantly less than them, it’s important to think through the financial impact that the loss of this partner may have, in addition to the obvious emotional loss. Below, we’ll cover what needs to be considered when deciding whether to get life insurance on a stay at home partner, as well as how to decide how much insurance to get for them.


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7 reasons you shouldn't overlook life insurance for a non-working or lower earning spouse


Where can I find life insurance for my stay at home (SAH) spouse?


If you need a policy for your spouse, we recommend working with an independent insurance broker. Brokers can run rates across multiple companies and help you navigate your options, and it doesn't cost you anything to use them. We have partnered with a few companies who have helped thousands of our members and their spouses.

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Policygenius: Policygenius is well known in the insurance space, and is a very convenient way to shop for life insurance as they will run rates across the major companies online within minutes, and then get on the phone with you to discuss your options. Contact them here.

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Pattern: This option will allow you to enter your information and immediately begin generating quotes, as well as schedule a meeting with the great team at Pattern to discuss the options and figure out which plan is best for you. Contact them here.

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Moment Insurance: Complete your quote inquiry information in less than five minutes and easily schedule an appointment to speak with a dedicated, experienced life insurance expert who will walk you through the process from start to finish and help you compare different options. Many in the group have worked with their experts previously, and had a great experience! Contact them here.



Should you always buy life insurance for a spouse, even if they don’t generate income or earn significantly less than you?


There’s likely no question in personal finance where the answer isn’t that it depends. But many high earning professionals make the mistake of assuming that the loss of a significant other’s income won’t be devastating financially, or that because their partner isn’t bringing in an income, that there’s nothing to insure. The fact is that a financial needs and personal goals can change significantly in these unfortunate situations, and life insurance can alleviate some of the financial stress associated with this.



The economic household contribution by a non-working, part-time, or lower-earning spouse is still significant


The contributions of partners who do the majority or all of the household tasks have significant economic value. Hiring out those tasks, whether they be childcare, cooking, cleaning, laundry, planning vacations, running errands, or any of the other things that require a mental load or physical effort are all things that would either need to be taken on by the working spouse or outsourced.


If the amount of discretionary or disposable income left in the main breadwinner’s paycheck after expenses, necessary savings, and other non-discretionary income would not cover the costs of outsourcing the tasks above to a full time nanny, household manager, executive assistant, or similar, losing a partner will have not just an emotional impact on the family, but an economic one as well.



Major life changes may occur in the event of the demise of a spouse


You may need to take some time off after their demise


This is a life changing event, and you may need some time to grieve and figure out life without your spouse. Having to go back to work within weeks or even days of this event may be something you’re not able to do, and if you shoulder a lot of financial responsibility, the opportunity cost of missing a large amount of work may not be feasible. Having some extra cash to buy yourself some time and allow yourself to heal, or take it easy as you ease back into work may be beneficial.



You may have a short term need for more cash because of life changes


Let’s say that you and your spouse live in a city where you don’t have family support, and you counted on your spouse heavily for support with your children. You may decide you want to move closer to family. It may or may not be a good time to sell your home or buy a new one, or the house in the new city may be more expensive.


There are any number of similar scenarios you could come up with, but the point is that having extra cash on hand will give you more options.



The primary breadwinner may want to or need to work less long term, and therefore earn less


It is quite feasible that the emotional toll of losing a spouse or life partner changes the outlook of the surviving spouse altogether. Suddenly, spending 60+ hours a week in the hospital may not be how you want to spend their day. You may want to be around more for your children, or make some major life changes that necessitate a pay cut, such as switching to a less stressful or demanding job or cutting back on your hours.


It’s hard to project ahead of time what you’ll want to do in this situation unless you’re in it. Having the payout from a life insurance plan may provide you with more options and flexibility in how you approach life after the loss of your partner.



Your spouse may want to ensure those that they love are taken care of without relying on you to carry out their wishes


It’s very important to remember that your spouse has likely sacrificed their economic potential to support your career, but that doesn’t mean that they shouldn’t be able to secure the life they want for their loved ones. 



You could remarry, and that could change family dynamics or add new members to the family


Your spouse may want to ensure that their children inherit a certain amount or have a specific gift set aside from them.



Your spouse may want to ensure that other loved ones such as parents or siblings are taken care of


While they may trust that no matter what, your children will be taken care of, it can be harder to ensure that their loved ones remain a part of your life as your life evolves and changes. If you currently support any of their loved ones, or if the plan was to support them, they may want to ensure that this still happens.



Your spouse may want to take care of you by giving you the gift of less financial pressure


As the primary breadwinner, you likely already felt the weight of being the source of income in the house. Depending on your income and where you live, that could have been burdensome, even as a physician. 


If a payoff eases the burden of a large mortgage, student loans, etc., it could be a way for your spouse to be at ease that they are taking care of you (and by extension, all those that you love as well). 



When might you not need life insurance for a non-working or lower-income generating life partner?


You’ve already hit financial independence and can afford any foreseeable additional expenses


If you already have enough money in the bank that you’re not worried about your ability to make the choices you want or afford the things you need regardless of the situation, then you may not need life insurance (for either party).



You don’t have any dependents or others that you’re trying to protect through life insurance


Again, you should consider the possibility that you may want to work less regardless, but if you don’t feel the need to insure against this, then it may make sense to forgo the additional life insurance policy.



How much life insurance should I get for a spouse or partner that is not the primary breadwinner?


While we have lots of general rules of thumb for how much life insurance a physician needs, most of those will not apply in the situation of a non-working spouse, as they were not shouldering the financial burden of the family. 


The calculations here will vary quite a bit. At the very least, you should likely get enough to cover the costs of hiring help for all the things that they currently do, for as long as you would need those people. For example, if you know you have young children and will need a nanny, it’s important to calculate (and account for inflation) the amount of money it would take to support the children in that way until your family would no longer need the nanny. 


Make sure you factor in:

  • Any changes you might want to make that would impact your income or increase your expenses

  • Any additional costs for household help or childcare

  • Any outstanding large financial obligations or debts you have such as a mortgage or student loans that you may need to address (for example, if you are relying on PSLF but need to work full time to get it, you may want to cover the possibility that you go to part time and then need to pay back student loans)



Things to know about purchasing life insurance for someone that does not generate income


Depending on where you’re buying life insurance and how much you’re buying, it’s important to note some logistical aspects of purchasing the insurance for a non income generating individual.


  • If you’re getting a larger policy, some insurers will want to know more about your income to support the underwriting for the spouse’s policy.

  • You may need a shorter term than you have for your own policy if you’re simply trying to cover expenses that would be larger while your children were living with you.

  • It may be beneficial to purchase with the same insurer that does your policy, as they may allow coverage up to the same amount as your policy which is based on your income.


Every company’s underwriting rules differ, so working with an insurance broker used to working with physician families can help you navigate the best plan for your situation and goals.



Conclusion


Losing a spouse is always devastating on many levels, but many primary breadwinners underestimate the financial impact that losing a non-working or lower earning spouse may have on their household and long term financial stability. Also, until they find themselves in this unfortunate position, they may not realize the impact it may have on their own earning potential or desires to make changes in their lives. Given that term life insurance is relatively affordable for most physician families, it generally makes sense to consider getting a life insurance policy on a spouse even if their financial earnings don’t currently support the family.



Additional insurance resources for physicians


Explore related PSG resources:


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