Protecting Against Disability with SAHM?

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k3vb0t
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Protecting Against Disability with SAHM?

Post by k3vb0t » Wed Apr 11, 2018 9:46 am

My wife is a stay-at-home Mom to our 2 kids (4 and 2). Her age: 33.

I've been reviewing our financial situation and it occurred to me that her becoming disabled would be a major impact on us. Is there any way to protect the financial value of her contributions to our family despite earning no income? We are planning on home schooling -- before we made that decision I thought she would go back to work (educator) and that would provide her disability coverage.

I was doing some research on SSDI and work credits. She worked from 2007 - 2015, full time, as a teacher. So of the last 10 years, she's worked 7.

My understanding of work credits for SSDI is if you become disabled between ages 31-42, you need 5 years of work and 20 work credits (where a work credit is essentially a quarter of a year worked). She would begin to phase out of that in 2020 with her last year of work being in 2015.

Additionally, I have no idea if SSDI would even be enough to cover expenses for care, strain on the family, etc.

Is there any other way to protect her financial contribution to the family?

sport
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Re: Protecting Against Disability with SAHM?

Post by sport » Wed Apr 11, 2018 10:19 am

In my state, public school teachers are not covered at all by Social Security. They are covered by the State Teachers Retirement Plan instead. This may or may not apply to your wife.

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MnyGrl
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Re: Protecting Against Disability with SAHM?

Post by MnyGrl » Wed Apr 11, 2018 10:37 am

sport wrote:
Wed Apr 11, 2018 10:19 am
In my state, public school teachers are not covered at all by Social Security. They are covered by the State Teachers Retirement Plan instead. This may or may not apply to your wife.
+1, it's that way in my state too. Maybe check the social security website to see her SS record.

LiterallyIronic
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Re: Protecting Against Disability with SAHM?

Post by LiterallyIronic » Wed Apr 11, 2018 10:40 am

I've wondered this too, so I'll be watching this thread with interest. I have disability insurance through my work, and my wife and I are currently looking at life insurance options, but I haven't figured out a way to get disability insurance for my wife while she's staying at home with the baby.

sport
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Re: Protecting Against Disability with SAHM?

Post by sport » Wed Apr 11, 2018 10:57 am

One way to get DI insurance is to borrow money. The bank/credit union will offer to sell DI to cover the amount of the loan. However, this would probably be temporary and insufficient insurance.

Texanbybirth
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Re: Protecting Against Disability with SAHM?

Post by Texanbybirth » Wed Apr 11, 2018 11:06 am

Interesting question. I'll follow this thread with significant interest.

My thought is to have a larger emergency fund (1/2 yr vs 6 mo, perhaps) that would give you flexibility to make decisions if this situation were to arise "unexpectedly". Of course, that would put a cash drag on your portfolio so it's a SWAN ("sleep well at night") personal decision. It's definitely a mental nag for me that causes us to be more careful with our money than many others in our situation.

Having family nearby would help too, as an incident that involves a spouse being disabled would cause family to help circle the wagons, at least in my neck of the woods.

k3vb0t
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Re: Protecting Against Disability with SAHM?

Post by k3vb0t » Wed Apr 11, 2018 11:25 am

@sport @MnyGrl: Thanks, I will look at both the teacher's website and create her an account with SSA. Of course we just tried to create the account and got one of the questions wrong so now have to wait 24 hours...

@sport: As you mentioned that wouldn't likely be enough money, would involve paying interest in addition to the disability insurance, so not a good fit.

@Texanbybirth: Emergency fund is in place, we are sitting on 10-12 months of expenses not including making massive changes, plus a significant cash reserve (I create a separate thread on the investing forum regarding that). We do have her parents 6 minutes door-to-door from us and mine are 2 hours away. So we definitely have that help and wouldn't be left out in the cold, but trying to do everything on my end to adequately protect my family without needing to be dependent elsewhere.

harmony
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Re: Protecting Against Disability with SAHM?

Post by harmony » Wed Apr 11, 2018 4:26 pm

This company says they insure stay-at-home-mothers: https://www.brightpeakfinancial.com/pro ... insurance/

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verbose
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Re: Protecting Against Disability with SAHM?

Post by verbose » Wed Apr 11, 2018 4:45 pm

When I was a SAHM, I injured my back while bathing a toddler. I had no recourse except to have my mother come and stay with us for a month because the child wasn’t walking yet and I could not lift her. It was about a year before the pain settled into “old injury” pain. When we had another child years later, the back pain came back. That child was a spit fire and kept doing things that forced me into split-second “unsafe lift” positions. My back issues certainly impacted when I went back to office work (sooner).

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dm200
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Re: Protecting Against Disability with SAHM?

Post by dm200 » Wed Apr 11, 2018 4:47 pm

sport wrote:
Wed Apr 11, 2018 10:57 am
One way to get DI insurance is to borrow money. The bank/credit union will offer to sell DI to cover the amount of the loan. However, this would probably be temporary and insufficient insurance.
Yes - BUT to be eligible the applicable borrower must be employed.

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dm200
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Re: Protecting Against Disability with SAHM?

Post by dm200 » Wed Apr 11, 2018 4:53 pm

Check SSDI (social security disability) and whether (if she qualifies for her age) whether she actually needs to be working when the disability happens. SSDI eligibility is a good reason for her to work a sufficient number of years.

golfCaddy
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Re: Protecting Against Disability with SAHM?

Post by golfCaddy » Wed Apr 11, 2018 5:39 pm

You can increase your UM/UIM. That's kind of a kludge, but it does provide protection if she's disabled in a car accident and isn't at fault.

pintail07
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Re: Protecting Against Disability with SAHM?

Post by pintail07 » Wed Apr 11, 2018 6:26 pm

Read their policy very carefully. There is a reason no other companies insure folks with no income.

warner25
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Re: Protecting Against Disability with SAHM?

Post by warner25 » Wed Apr 11, 2018 7:04 pm

Our family's situation is almost identical, and I'm sorry to say that I haven't found a solution. I looked at the Bright Peak Financial product a while back and was very disappointed; the limits were nowhere near enough to cover what we'd need living far away from our extended family. I agree with golfCaddy about UM/UIM coverage; I dramatically increased our limit based on this reasoning. A car accident is the most likely cause of a catastrophic disability, but I still worry about less serious things like verbose mentioned.

k3vb0t
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Re: Protecting Against Disability with SAHM?

Post by k3vb0t » Wed Apr 11, 2018 7:43 pm

Good point, golfCaddy.
warner25 wrote:
Wed Apr 11, 2018 7:04 pm
Our family's situation is almost identical, and I'm sorry to say that I haven't found a solution. I looked at the Bright Peak Financial product a while back and was very disappointed; the limits were nowhere near enough to cover what we'd need living far away from our extended family. I agree with golfCaddy about UM/UIM coverage; I dramatically increased our limit based on this reasoning. A car accident is the most likely cause of a catastrophic disability, but I still worry about less serious things like verbose mentioned.
Do you mind me asking what you raised it to? We're currently sitting on $100k/300k. I just checked and raising it to $1Mil/$1Mil requires raising bodily injury liability from 250/500 to 1Mil/1Mil as well. Premium goes up $108.40 per year. So that's a starter option for sure. (Going 500/500 on both increases premium by $49/year.)

Question then about health insurance and uninsured motorist -- does it work like this? UIM would be primary until exhausted and then medical insurance kicks in for the medical need? So in theory the UIM coverage could be used up, health insurance not touched, but you're still left with big long term problem?

golfCaddy
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Re: Protecting Against Disability with SAHM?

Post by golfCaddy » Wed Apr 11, 2018 8:04 pm

k3vb0t wrote:
Wed Apr 11, 2018 7:43 pm


Do you mind me asking what you raised it to? We're currently sitting on $100k/300k. I just checked and raising it to $1Mil/$1Mil requires raising bodily injury liability from 250/500 to 1Mil/1Mil as well. Premium goes up $108.40 per year. So that's a starter option for sure. (Going 500/500 on both increases premium by $49/year.)

Question then about health insurance and uninsured motorist -- does it work like this? UIM would be primary until exhausted and then medical insurance kicks in for the medical need? So in theory the UIM coverage could be used up, health insurance not touched, but you're still left with big long term problem?
You can't buy more UM/UIM than you have in liability. Not that I'm recommending it, but AIG will go up to $10M in UM/UIM. As to the subrogation issue, it depends on state law. In some places, you would have priority. In others, the health insurance company would take priority. In most states, there would be some type of proportionate loss sharing if the total loss exceeded UM/UIM limits.

need403bhelp
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Re: Protecting Against Disability with SAHM?

Post by need403bhelp » Wed Apr 11, 2018 8:14 pm

Out of curiosity, if you get a standard own-occupation disability policy from one of the major disability insurers while working and then become a stay-at-home parent, can you usually keep the policy? If so, will it pay out if you become disabled while you are not working?

ncbill
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Re: Protecting Against Disability with SAHM?

Post by ncbill » Wed Apr 11, 2018 8:34 pm

yes, please have the stay-at-home work the minimum to remain eligible for SS disability (IIRC, generally 20 credits over the previous 5 years)

mom lived on alimony but developed dementia in her mid-40s.

since she lived with the disease until her mid-60s SS disability would have been a godsend for the Medicare eligibility alone.

k3vb0t
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Re: Protecting Against Disability with SAHM?

Post by k3vb0t » Wed Apr 11, 2018 9:16 pm

ncbill wrote:
Wed Apr 11, 2018 8:34 pm
yes, please have the stay-at-home work the minimum to remain eligible for SS disability (IIRC, generally 20 credits over the previous 5 years)

mom lived on alimony but developed dementia in her mid-40s.

since she lived with the disease until her mid-60s SS disability would have been a godsend for the Medicare eligibility alone.
Sorry to hear that.

Interesting, self-employment counts, too. $1,320 in income (wage or self-employment) = 1 credit. You can earn 4 credits per year.

We run a small side business reselling items on Amazon. We have been putting everything under my name, but we're trying to figure out how to form an LLC. Now I wonder if we should set it up where she is the majority owner, ramp up our efforts there, and build up credits for her that way.

warner25
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Re: Protecting Against Disability with SAHM?

Post by warner25 » Wed Apr 11, 2018 9:28 pm

k3vb0t wrote:
Wed Apr 11, 2018 7:43 pm
Do you mind me asking what you raised it to?
We went up to $500k. I don't remember if $1M was offered through our carrier, but that seems like more than we'd need anyway. Previously I set the limit to the minimum because I figured that our medical insurance would cover everything... then I read about what UM/UIM will cover in addition.

I don't know the answer to your second question, and never thought about that. That's a horrifying possibility.

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