Would you pay into an insurance policy if it paid out while you stay home?

Tiffany - posted on 08/29/2014 ( 4 moms have responded )

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I'm a new mom with a two-month old; I've been very fortunate because the nature of my job has allowed me to be on leave for over six-months, with pay. I also receive benefits from a disability insurance policy sponsored by the union I belong to.

The thing is, once my physician says it's OK for me to go back to work, I won't be paid anymore (though, theoretically, I can remain on unpaid leave). Naturally, I'm completely in love with my baby and I have no designs on returning to work any time soon--but I'm used to a larger income and obviously families cost money.

It's no secret that women with children get treated rather shabbily in this country when it comes to maternity leave/staying at home. So here's my idea: an insurance company that sells policies to women and pays out after the birth of a child. You choose a premium and determine how much you'd like to receive monthly, for how long, etc. I think this would really help women and families maintain a reasonable standard of living while children receive the best care--from mom!

I'm of the opinion that there's a real demand for a service like this. I'd love some feedback from moms like me: would you buy an insurance policy that paid out monetary benefits while you're staying at home with your child(ren)?

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Jodi - posted on 09/01/2014

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It's still just a savings account because you are nominating how much you want and then getting charged a certain premium based on that. And a commission too, for the benefit! It's just another name for forced savings. I'm just not seeing any benefits to it.

I am also not seeing how an insurer could possibly make money out of something like this. After all, why would you take out a policy like this unless you were planning on having kids? In which case, it is a certainty you are going to claim, so therefore, premiums would be high or the insurer would make no money.

Tiffany - posted on 09/01/2014

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Perhaps I haven't outlined my vision clearly or provided enough details because it seems as if those responding don't get what I'm talking about: if you know anything about disability insurance, I suggest you refer to that model as a reference in trying to understand how such a policy would work: you pay for a policy-- if you get sick or injured you are paid an amount you chose when you bought the policy (based on how much income you believe is adequate to supplement your household intake). In this vein, parents would choose how much they want to spend/receive and, as I said, maintain a guaranteed income for the duration of leave (that's presumably longer than 6-8 weeks).

I agree that government-generated social programs should be ensuring that women and families get treated more fairly when it comes to maternity leave/staying-at-home--other countries have superior models when it comes to such things. But if you're referring to welfare and subsidies, that's in the complete opposite direction of what I'm trying to accomplish. The type of privatized insurance that I'm outlining is a more empowering step to take until the government does what it's supposed to.

As for saving is concerned, everyone reasonable knows that not everything goes to plan when having children. Medical complications arise and insurance may not cover everything, some people have multiples, a partner/spouse could lose their job, etc. What if some unexpected event occurs which requires you to spend a large portion of these savings? I don't care how much saving you learn to do, the average American family isn't equipped to save enough money to care for a child at home for an extended period of time, with only one income, and at the very least, without a very strained budget.

I do appreciate the feedback though, keep it coming.

Chet - posted on 08/30/2014

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Personally, I think it's better to have social programs that support all mothers and families that need it. Society benefits as a whole when families are supported. Kids who are raised with the quality care that they need give back to society when they grow up. And in general, it's the kids who were deprived growing up who cost society a lot.

Lots of countries do have systems in place that help families with young children so it isn't a hardship for parents to be home with babies and little ones, and quality childcare is available for a reasonable cost when parents do go back to work.

I'm also not clear on how this would work as an insurance policy. Insurance is protection for something that might happen. Presumably, you wouldn't buy this product unless you fully intended to have children... but if you couldn't have children for some reason, it would be hugely tragic for the money you paid in to subsidize other people to stay home with their kids. And if you were allowed to take your money out for any reason how is that different from a savings or investment plan?

I'm not an actuary though. Have you talked to anybody in insurance about the feasibility of this?

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