Life Insurance Is A Reason Why Your Spouse Doesn’t Need To Work

I've faced interesting criticism for encouraging my wife to re-enter the workforce after she left in 2015. However, it's important to clarify that she hasn't been truly retired. Instead, she has been actively engaged as a full-time mom since 2017. In addition, she has helped do a lot of the operational and editorial work for Financial Samurai since 2009.

One reason why I'd like her to return to work is to ensure she can provide for the family in case I pass away before our kids reach adulthood. With ever-increasing inflation, raising a family is getting more difficult by the year. In addition, even though the economy is hunky dory right now, there will be downturns in the future. After all, the best time to gather food is during the summer, not the winter.

Managing our family's finances, overseeing rental properties, and running Financial Samurai, I play a vital role in our financial stability. If something were to happen to me, our family would be at financial risk. However, if my wife returns to work once our kids are in school full time, it would enhance our family's security.

I admit to being selfish because I want the reassurance that, in the unfortunate event of my premature passing, my wife and kids will be alright. There's a reason for the saying, “May you rest in peace.” There won’t be peace if they’ve got to upend their lives because of me.

Encouraging my wife to update her resume, refresh her job skills, earn income, and have a purpose in case I'm not around is a source of comfort for me. Additionally, I believe that her working sets a valuable example for our children.

My own strong work ethic partly stems from witnessing my parents' dedication to work growing up in Japan, Taiwan, and Malaysia. If our kids can cultivate a similar work ethic, it would significantly improve their chances of achieving financial independence in the future.

Life Insurance Reduces The Need For A Spouse To Work

I've been so focused on planning for a future that involves returning to work, that I forgot about our life insurance policies obtained through Policygenius. Amid the pandemic, my wife and I secured matching 20-year term life insurance policies with $750,000 death benefits. Before we had mismatched policies with different death benefit amounts and durations.

My search for an affordable policy spanned several years, but in 2017, I faced a setback when diagnosed with sleep apnea, limiting me to a policy costing an unaffordable $480 per month.

Determined to find a solution, I underwent another sleep apnea study, and the results showed a milder condition. With this improvement, I reapplied for life insurance and successfully secured a policy at a much more manageable $138 per month. The relief was palpable. Please be smart and lock down a life insurance policy before seeing a doctor for anything other than a cold.

Following a podcast episode where my wife and I discussed intrinsic versus extrinsic motivation to work (Apple or Spotify), a reader reached out with the following email.

Email from podcast listener that made me see the light:

Sam,

Really enjoy the content you provide weekly, thank you!

On a recent podcast, you discussed the benefit of your wife returning to work in order for her to be able to provide for herself and your children should something happen to you. 

My wife and I currently both work full time jobs. I know that I have enough life insurance that can replace my income through the rest of her working years so she and our children are not impacted financially should something happen to me. 

We are looking over the budget right now to see if we can make it work for her to stay home – our medical expenses and situation differ drastically from most families. 

Given your wife’s comments about not wanting to return to work, I’m wondering why you feel this is what is best if the same goal can be accomplished by affordable term insurance?  I realize you may not be insurable, if so, this is likely coming across as rather cold – if that’s the case I apologize. 

I’m sure this sounds critical, and I don’t know your family situation, from the outside, appears she will be happier at home and you don’t have to deal with a competing working schedule, asking for time off, office policies/frustration, etc. 

Jeremy 

Life Insurance Helps Keep Retirees Retired And Stay At Home Parents At Home

Ah hah! I never thought of this angle before. Working parents with a stay-at-home partner can feel more relief. Men who claim FIRE but insist their wives continue working for financial security can now let their wives be free too.

Thanks to Jeremy, I now recognize the immense relief our life insurance policies provide. In the event of my premature death, the $750,000 tax-free death benefit would cover approximately three years of living expenses if she didn't change a thing.

This period should afford my wife ample time to navigate our financial matters. She'll have enough time to sell off assets at a reasonable price, instead of being a forced seller. She could also hire assistance for sustaining Financial Samurai since there are now so many articles to update. Finally, she could bide her time in securing part-time or full-time employment if necessary.

While ideally, I would prefer a $1 million death benefit, $750,000 was the maximum achievable without undergoing a medical exam. Perhaps I'll just shop around for another $250,000 term life insurance policy to top things off.

With our life insurance policies in place, my wife doesn't necessarily need to return to work solely for the family's financial security anymore. Instead, any decision to re-enter the workforce would be driven by her finding fulfillment in the chosen endeavor.

Game Plan To Make The Death Benefit Last Longer

In the meantime, to make the death benefit last longer, my wife could dramatically cut down on sneaky expenses to the tune of $1,500/month. With one less person to feed, saving $1,000+/month on food should be relatively easy.

If needed, the next step would be to downsize homes by selling our existing one and moving back into our old home. I don’t think our kids would object too much since they lived there for three years and enjoyed it. It was a home I had envisioned living in for 10 years. With only three people, if she doesn’t find someone new, our old home’s size is more appropriate.

The final cost-saving measure would be to stop paying for language immersion school and transfer our kids to a free public school the following year. Although this will be the most disruptive move, the savings would be immense. I find solace knowing that I changed grade schools every 2-4 growing up and turned out OK. Change forced me to work on my social skills.

median square footage of single-family homes over time in America

Going Back To Work In Some Capacity Is Still Worthwhile

Despite the realization my wife doesn't have to return to work thanks to my life insurance policy, I still think it's a good idea. Our financial independence status has shifted after acquiring a new home. If my wife were to return to work, we could potentially regain financial independence sooner by one or two years.

There will be a void to fill once both kids are in school full-time starting September 2024. Why not spend the extra free time finding something interesting to do that also pays? Alas, after years of autonomy, it’s hard to be back on someone else’s schedule.

Any return to work would be temporary. Working for three-to-five years after enjoying absolute freedom from 2015 to 2024 seems like a favorable trade-off.

Short-Term Sacrifice For Financial Freedom

What are you willing to sacrifice for financial freedom? Personally, I'm willing to do just about anything.

Some individuals opt for mini-retirement breaks on their path to financial freedom. This is a wise strategy as it prevents their resumes from becoming too stagnant. If I had a retirement do-over, I would have taken a three-month sabbatical to extend my career at least until age 40. Leaving work at 34, in retrospect, was too early.

Fortunately or unfortunately, my wife and I have taken extended breaks. Our 12-year and a nine-year hiatuses place us at risk of challenges in reentering the workforce. I’ve witnessed this scenario too often: a parent leaves work to become a stay-at-home parent for years, only to find no comparable-paying jobs awaiting their return.

However, if we manage to secure jobs again, it presents an opportunity to refresh our respective resumes. By dedicating a focused three-to-five years to work and aggressive saving, we believe we can secure our financial well-being for the remainder of our lives.

Having already budgeted for major expenses such as college, a new car, and our forever home, there are no significant financial hurdles ahead. The main challenges lie in the inevitable unexpected expenses we will encounter, making it crucial to urgently rebuild our liquidity before they occur.

While life insurance provides us with security, the window of opportunity to reenter the workforce is narrowing. Consequently, in our mid-40s, I am eager for both of us to give work one last dedicated effort.

Reader Questions And Suggestions

Have you ever thought about how life insurance decreases the need for one parent to have to go back to work? If so, is getting life insurance even more valuable since it lets at least one parent remain free?

If you're looking to get an affordable life insurance policy, check out Policygenius. You'll get customized quotes in one place. The relief I feel from having matching term life insurance policies alone is worth the monthly premiums.

To achieve financial freedom sooner, join 60,000+ others and sign up for the free Financial Samurai newsletter.

29 thoughts on “Life Insurance Is A Reason Why Your Spouse Doesn’t Need To Work”

  1. Hey Sam,

    I finally took your advice and got a 15 year term 2mm death benefit after discovering an insurance gap with my financial planner. I used policy genius and there was no health exam, I was approved the same day.

  2. Scott Carpenter

    Overfunded whole life is the easy solution to this… it gets crapped on by those who don’t know how to get amazing policies with permanent death benefits, protection from creditors, tax free or deferred growth (depending on how you access your money), and an IRR of 5-5.6% while still having access to your money.

    I funded $100k/year for 7 years, and will get all those protections plus I’ve loaned the same money to myself to buy 4 different real estate properties and a business acquisition. I also walked into $2.8M in permanent death benefits, but that will increase all the way to $9.7M by the time I’m 80 (with a cash value of $7.3M), and only goes up from there.

    I can spend every penny I’ve got and still have inheritance for my kids…

    Can somebody help me understand why more people don’t do this?

    1. Colorado Craig

      Here is my life insurance strategy/journey over the last 30 years. I am not an insurance guru by any means and am not advocating just sharing what I did. I have learned over the years there is not right decision when it comes to investing! My view in order of life insurance requirements.

      1. Providing a death benefit to take care of your loved ones
      2. Protecting a business- partner or family
      3. Investing
      4. Estate planning

      1. Taking care of our family in the event something should happen to me or my spouse was the real basic tenet for our life insurance. We did scenario planning basically how much did we need for how long. We had to look at all the gruesome scenarios especially if you have kids. Term Life insurance policy premiums are much less expensive than whole life so we could get a larger death benefit for a lower cost but of course it had a time horizon associated with it. We decided to go term policy with an option of converting to whole life at some point before the policy expiry. Leaving an option for a longer time horizon. We staggered the policies by 2 years. The cost of insurance goes up with age and medical condition however converting to whole life or adding opp riders (paying above the premium) did not require a physical. I could only insure myself due to my wife’s health. I do know people who just bought whole life straight away to ensure a child with disabilities always had care past the parents death. We did convert to whole life I will explain why…

      2. Sharing for completeness I have friends with businesses and in partnerships. Their companies bought whole life on the principles to buy out the estate in case of death. In one instance one family member was going to take over the business the whole life policy paid out the other sibling.

      3. Later I did start to view life insurance as a possible investment instrument. Grows at 4-5% tax free (generally tied to the bond market and interest rate), pays out tax free depending on the size of the estate at death. I can borrow from it without any requirement: my interest is a point above prime. Unlike margin I do not have to pay it back but the death premium decreases. At some point the dividend can pay for the premium and grow cash value. The premium is like a mortgage it needs to be paid to keep the policy enforced. Lower risk with a reputable firm. The policy pays the death benefit not the cash value plus death benefit.

      I was fortunate enough to work for a company that had a 401 K plan. When I ran the numbers I felt I was still better off putting the money into the 401K plan than converting the whole life insurance policies. Years later when I maxed out the 401K contributions and had built up a non qualified portfolio I looked into diversification as well as tax advantaged income. I did not want to be a landlord so rental properties were out (there were no REITS at the time) that left municipal bonds and looking at the insurance policy. For portfolio diversification I was viewing the insurance policy similar to a bond position. At the time based on our estate planning I decided to convert to whole life. I also liked the idea of borrowing component. With the luxury of looking back 30 years and market performance, maxing out the 401k before converting to whole life was the right decision for me. Had I not maxed out my 401k I would probably not have converted the policies to whole life.

      4. Because of my situation I started estate planning in my early 30’s. I am glad to have whole life insurance as a part of the portfolio today. It is a great asset class for diversification and provides a lot of flexibility. One thing I did not think about is long term care when I was 30 LOL! These policies can be used for that as well. The other is liquidation of estate taxes depending on where that goes over the next few years. I am considering moving the policies to an irrevocable life insurance trust (ILIT).

      So after all of that what is my summary/experience… First I had to have life insurance with a family it was imperative to cover all of the possible scenarios. For that purpose at the time term policies were best for us lower premiums higher death benefits. I wanted the option to convert to whole life if I needed a longer time horizon for coverage. Based on my risk tolerance of being in the market and maxing out my tax advantaged account versus whole life the 401K won out. When I weighed muni bonds versus converting to whole life as tax advantaged portfolio diversification along with the estate planning whole life won out. That is my story….

      1. Scott Carpenter

        Awesome to see that you understand the value of it. It should be a staple for almost EVERYONE.

    2. – permanent death benefits – so what? in the short-to-medium term, term life covers you. At death – you don’t need the insurance and the growth of your portfolio will create more $$ than the death benefit
      – protection from creditors – doesn’t apply to most people here with W2 income. Sure if your situation is unique. But if you’re part of the work moderate wealthy, what are you worried about
      – Tax free / deferred growth – A growth portfolio is essentially tax deferred. The tax free component applies to large estates, and in some cases, can make sense. I’ve done the math, and still makes sense to be invested in the market and there are other tools to lower estate tax burden
      – Loaning myself money – should never need to, combined with the fact that you can get a credit line against your portfolio

      Ultimately, I want the highest returning vehicle. There’s no reason this should outpace a DIY portfolio in the market. The only time I’ve considered whole life is as an alternative to the bond portion of a portfolio

      1. Colorado Craig

        Hi Jake
        Agree…I am not very good at being direct.

        For me whole life is not an investment per say. Started investing in the market in my early 20’s with a brokerage account and called a broker to buy a stock. No internet. Cost averaged in didn’t panic (saw a lot!) or try to hit a home run. Significantly higher rate of return than whole life or bonds over the 35 plus years.

        Believe life insurance is a must to take care of financial needs if a care giver or financial provider passes. Term insurance is the way to go unless a reason for extended coverage/protection is required. Liked the option to convert to whole life always leave doors open.

        In my view whole life is an estate planning instrument. If the estate exceeds the current tax free limit (which was raised significantly) $13.61 million per person up to $27.77 for couple (increases with inflation) comes in handy. In 2026 that number gets cut in half if congress does not extend. And it can change again and again and again…The insurance if set up properly can be a hedge assuming no significant legislation changes that LOL…meantime it looks like a bond sort of.

        1. Totally agree, and similarly like the term life with a convertible feature as your financial picture becomes more clear over time

  3. If something happens to me, my family’s lifestyle won’t change much. They will get Social Security benefits. Which is more than my active income. In addition, I have a $250,000 term life insurance policy. That’s enough to cover 4 years of our living expenses. Our overhead is low. If she keeps the lid on lifestyle inflation, she’ll be fine.
    My wife can retire whenever she wants. She likes working so I don’t see why I should keep bugging her about retiring. It’ll upset the family harmony.

    1. Given she is the breadwinner, it makes sense that nothing will change financially if you were to pass. Did she have a change of heart? You were saying that over the past couple of years she no longer likes her job. Have you been able to convince her to keep on working more? If so, congrats!

      1. If something happened to her, our lifestyle wouldn’t change either. We don’t need her income to maintain our lifestyle.
        It’s up to her when to retire. But she prefers to work right now because she is like the typical American worker. They feel better about themselves when they are contributing to society.
        Most people don’t like their jobs that much, but they keep working. That’s normal.
        I avoid telling her what to do. That doesn’t work for us.

  4. I view adequate life insurance and disability insurance as absolute requirements for anyone that has dependents and will require additional funds should they (or spouse) no longer be able to work.

    1. jeffrey luna

      absolutely, you’re more likely to be disabled than dead. in addition, get adequate disability coverage but you need enough money to cover your lost income plus cover the cost of your disability.

  5. Fascinating to see and hear so many male FIRE bloggers and podcasters with wives who work and receive healthcare and retirement benefits.

    I’m curious why more readers and listeners don’t call them out on a situation where no stay at home with or parent would say they are retired.

    Hopefully this post and life insurance will help these males overcome their egos and financial fears!

  6. I have been reading your posts for years, and really have learned a lot from you. However, I am a bit confused as to why you (or encourage your wife) need to go back to work since your last house has been rented so your passive income is higher now. Additionally, one post you have stated that you are concerned to die with too much assets and have been trying to decumulate, isn’t going back to work is to accumulate more given you have made a very good living off your blog and passive income? No judgment here, just trying to understand.

    Your site is about FIRE but you really are FI but not RE since you have been working hard at writing 3 times a week since 2012.

    1. Financial Samurai

      Sure. Sorry for the confusion. Will summarize what I wrote in the post:

      * Boost liquidity
      * Set a good example for our kids, especially our daughter
      * Ensure my wife can take care of our family if I were to pass prematurely so I can RIP
      * Pay for the inevitable unexpected expenses we will encounter

      How about you? Does your spouse work? If not, how long has it been since they have not had a day job? It’s great to know something about yourself too.

      See: 10+ Years Of Fake Retirement Later

      1. Many thanks for taking the time to respond. It makes sense now.

        Yes both of us have worked for 30 years and bought term life insurance policy when kids were very young in case something were to happen to both of us. We have been very lucky to have made good living in the last 30 years, however, I regretted (my wife as well) not spending enough time with kids when they were young. Back in the days, there was no such thing as “working from home”. With long hours at work plus commute, we didn’t have much free time other than occasional weekends. However, we have been extremely lucky as our kids turned out really well. They never got into any trouble, did exceptionally well in school and got into top colleges. Now, they both have professional jobs in their 20s.

        My wife has retired for a few years now but not by choice, it was very difficult for her to find purpose and identity after layoff even though we don’t need money. Thankfully, she has made peace with it now.

        We both are very ambitious professionals, and we wanted to set up good example for our kids so have continued to work even though we had achieved our financial goals in our 40s.

        Your children are very lucky to have you and your wife stay home with them in the last few years, the memory and experience you share with them will forever lasting.
        I wish we had the opportunity to do the same, but it’s what it is. We all made our choices and have to live with them.

        1. Thanks for sharing Jerry! Yeah, this work from home many people now have, including my wife and I, is really a benefit for parents. I’d like to take advantage.

          Once or four-year-old daughter goes to school full-time the September 2024, we will have a void to fill. So I feel it is wise for one or both of us to do some part-time or full-time work to rebuild the liquidity.

          There’s really only so much PickleBall and Tennis I can play every day until my shoulder and knees fall :)

          Congrats for raising great kids!

  7. Yes. My wife and I got term life policies 10 years ago when she got pregnant. That was when I was 30 and still had not been to the doctor much. Was able to get $1.25M, 30 year policy for $900 per year.combined with savings rates, and residual income, she’ll be fine for 10 years or more without changing anything.
    My wife’s policy is $500k, for 20 years. Assumes I would need help with child care. Once kids are out of the house, no need for insurance. Cost $275 per year.

  8. Sam, it sounds like it’s time for you to go back to work full time. Get a high paying job and all problems solved.

  9. Why the hesitation to get a medical exam? A nurse came to my home for the exam. It’s a breeze. I got a 20yr term for $1M with State Farm for under $1k/yr, starting at age 40. Seems better value than your off the shelf purchase. Also got a separate 30yr policy – about $1,800/yr. In your 40s, is the last opportunity you have, to buy reasonably priced cover to last beyond age 60. And if you later decide you don’t want it after all, you can just stop paying.

      1. I’ll be 68 yrs old this July. Having gravitated to a new primary physician a few years ago due to perceived chest pains, we both agreed that 6-month blood work provided advance warning to problems coming down the bend. Wouldn’t this be useful to you also?

  10. Like yourself, I’m 46 with a non-working spouse and two little kids. Also keep in mind the survivor benefits under SSI. I think a lot of people either aren’t aware of them or don’t factor them into their estate planning. They aren’t a huge amount but I’m showing a monthly benefit of about $5,000 for my non-working wife and 2 minor kids if something were to happen to me as of my most recent SSI statement (something everyone should check annually for accurancy). Between that and the $950,000 in life insurance I have through my employer (bank) I feel pretty comfortable that they would be set up.

    1. Such a good reminder about SSI survivor benefits. I’m going to write a post about it so we all know about it. Unless you’d like to write a guest post for me?

      All good either way. Such an important topic!

      1. Social Security employee here.

        These are Social Security survivors benefits which is an earned benefit. The amount paid varies based upon the earnings of the deceased individual.

        SSI is paid to people that have limited work history. The SS does not stand for Social Security. It stands for Supplemental Security and the I stands for Income.

        More than you care/need to know I’m sure.

  11. It’s so true that since planning for our own demise is not a fun exercise and something we want to believe is multiple decades away that we can just put it off and keep putting it off. My parents act this way even in their mid 70s. But the sooner we do it, the easier it is while our mental capacity is stronger and our health is still on our side, and the premiums are priced our favor.

    I love having life insurance but a lot of people don’t have it either because they don’t value its importance, don’t understand it, or want to avoid thinking about death. I was just talking to a friend of mine the other day who was going to get some medical diagnosis tests. I asked if he already has life insurance since he’s married with kids. He said no and looked confused when I suggested he get life insurance before doing any tests b/c the results could potentially quadruple his policy cost. A lot of people just don’t think about these things b/c they aren’t aware. So thanks for writing about important topics like life insurance and other topics related to estate planning.

  12. Sam
    I came to the realization life insurance is a must if you have kids regardless if your wife works. In our early 30’s my wife was diagnosed with cancer and we were told we needed to get our affairs in order. Fortunately we had a miracle and we just celebrated our 32nd wedding anniversary! Obviously there is a lot to process when something like this happens. We got our estate plan together, wills and worked out guardianship for the kids. I started to get life insurance policies on myself. Our concern was planning for the event if something happened to me the kids would be taken care of financially. Fortunately I was in good health and was able to get the necessary coverage at a reasonable price. I staggered three term policies to provide a longer time horizon and in case I wanted to convert some of them to whole life in the future. Reason being this would give me coverage options if I needed it later and not have to go through a physical again. In the moment I realized it was really foolish for us not to have life insurance on both of us and “our affairs in order” when we had our first kid. Since then I review the trust, wills, life insurance and portfolio every year to make sure our affairs are always in order!

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