Family life

Why stay-at-home moms need life insurance

As she eliminates unnecessary household expenses, Jennifer explains why life insurance will never be cut from her budget.

By Jennifer Pinarski
Why stay-at-home moms need life insurance

Last month, my friends Ken and Cara from Winnipeg posted a heartbreaking story on Facebook about the death of a Morden, Manitoba stay-at-home mom.

Twenty-one year old Samantha Schlichting was killed on September 9, 2012 when a drunk driver struck her vehicle head on, leaving her husband and two young children to grieve and put the pieces of their lives together.

Surprisingly, the story focused not on the appalling impaired driving statistics in Winnipeg (where Schlichting was killed), but on what was deemed inadequate compensation provided by Manitoba Public Insurance (MPI). The crown-owned insurer paid $56,888 to Schlichting's surviving spouse — the minimum traffic fatality payment because, as a stay-at-home mom, she did not earn an income. "They don't seem to place much value on a stay-at-home mother," says Schlichting’s widow, Landon Hay.

Hundreds of people left comments on the Winnipeg Free Press website regarding the follow-up editorial and the majority agreed with Hay — MPI’s fatality payout is unfair because it does not take into consideration a stay-at-home mom’s financial value for all the unpaid work that she does.

Questioning the value of a stay-at-home mom is the last thing a family wants to do, especially in the aftermath of a tragedy such as this. Sure, there are arguments made for paying stay-at-home parents a salary (recently suggested by celebrity mom Jenny McCarthy), while websites like suggest that for all of the work that they do, stay-at-home moms should be paid $112,962 annually. But the reality if what we earn is a hollow zero.

When you’re scrutinizing your household expenses (like we are now), it can be tempting to look at life insurance as a "nice-to-have" instead of a "need-to-have" budget item — and you may wind up either cancelling your policy or procrastinating in talking to an insurance broker about buying one. And admit it: Buying insurance policies is basically declaring that you’re a boring grown-up and can’t stay up past your kids’ bedtime.

But buying life, disability and critical illness insurance policies were the first things my husband and I did when I left my career to become a stay-at-home mom. We worked with one my former employers, Winnipeg-based financial advisor Karen Diamond (CFP R.F.P.), to make sure that our life insurance policies pay out our mortgage, outstanding debts and still leave money behind for our children’s education. “Almost without exception, families have to buy extra insurance to cover the possibility of the loss of one of the partners, or the single parent, or even of one of the children — employer group plans are rarely enough," says Diamond.

“Since life and critical insurances are optional, lots of people accept the risk and just cross their fingers because it is another expense when money is probably already tight," she adds. "When something like this happens [the], people become acutely aware of the value of insurance."

Diamond recommends working with a qualified insurance broker or an independent financial planner licensed to sell insurance, preferably one with Certified Financial Planner (CFP) or Chartered Life Underwriter (CLU) designations.

The decision to become a stay-at-home mom is almost always an emotional one. How many of us gave up an income to fulfill the romantic dream of watching our children grow up? But the reality is that the hugs and kisses from our kids — which many SAHMs say they are happy to be paid with — will not cover household expenses if they become critically ill or, like Samantha Schlichting, tragically and unexpectedly die. The rose-coloured glasses we wore when starting our journeys as stay-at-home moms can make us forget that at any moment we could lose our health, our spouse could lose their job or either parent could lose their life. And for that last reason alone, life and critical illness insurance will be an expense that we will never cut from our budget.

This article was originally published on Mar 14, 2013

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