Term life insurance: Protection for the stay-at-home parent
22 Jan 2026
10
Minutes
Katrin Straub
CEO at nextsure
Many families only secure the main income and overlook the immense economic value of childcare. If the parent at home is no longer present, immense costs for household help and care arise, which are hardly manageable without term life insurance.
Topics on this page
The topic in brief and concise terms
Care work is of high market value: Securing the parent at home is just as important as securing the main earner to cover replacement costs for childcare.
Save on taxes through structure: Use the cross-insurance model to avoid inheritance tax, especially if you're not married.
Plan dynamics and term: Choose a term up to the end of the children's education and pay attention to guarantee options for additional insurance to ensure maximum flexibility.
The Invisible Paycheck: Why Care Work Needs to Be Insured
Not only income from employment needs protection. In actuarial science, the value of unpaid care work is often underestimated, but the reality is different. When one parent stays at home, they take on roles that would be costly to pay for on the open market: educator, cook, cleaner, logistician, and manager of everyday family life. According to current data from the Federal Statistical Office (2024), women in Germany perform on average about 44 percent more unpaid work per week than men, which often accounts for the majority of organisation in families with children.
If this parent were to pass away, the surviving partner must continue to work to secure the livelihood. This means that the previous contribution to the household must be replaced by external help. A professional nanny or housekeeper costs between 25 and 35 euros per hour in Germany in 2025, depending on the region. Calculating this for a 40-hour week results in monthly costs of over 4,000 euros. A term life insurance policy absorbs precisely this financial shock and ensures that the children can continue to be cared for in their familiar environment.
Replacement Costs: Professional care is significantly more expensive than child benefits or state subsidies.
Stability: The insurance sum allows the surviving parent to reduce working hours to be there for the children.
Protection Against Poverty: Particularly in single-earner models, the risk of financial instability without term life insurance is extremely high.
The right insurance amount: How to calculate the need
The calculation of the insurance sum for the parent at home follows a different logic than for the main earner. While the usual approach for earned income is to set between 3 to 5 times the gross annual salary, the real repurchase costs must be calculated for care work. A solid benchmark for the year 2025 is a sum that covers at least 50,000 euros per year for the duration of the planned care period. For example, if your youngest child is three years old and you want coverage until they turn 18, this results in a period of 15 years.
In this case, at least 750,000 euros is reasonable. This may sound like a lot, but consider inflation and increasing wage costs in the service sector. A higher sum also provides the partner with the necessary buffer to reduce work commitments. At nextsure, we recommend planning a bit more generously, as the premiums for term life insurance are relatively low if you are in good health.
Determine the years until the youngest child achieves financial independence.
Set a realistic hourly rate for a household helper/nanny (approx. 30 euros).
Multiply the requirement by the term and add a buffer for educational costs.
The cross-insurance: Skillfully avoiding tax traps
A crucial aspect of term life insurance is the contract design. Many couples make the mistake that the insured person is also the policyholder. In the event of a claim, the insurance sum becomes part of the estate. Although there are high allowances of €500,000 for spouses, inheritance tax can quickly come into play with large insurance sums or additional property assets. This is particularly critical for unmarried couples, whose allowance is only €20,000.
The solution is the so-called cross-insurance. In this case, Partner A is the policyholder and premium payer but insures the life of Partner B. In the event of Partner B's death, Partner A receives the sum directly from their own policy. Since it is not an inheritance, no inheritance tax is due. This model is standard at nextsure in advising, to ensure that the money reaches where it is needed: with the family, without deductions by the tax office.
Duration and Flexibility: Adapting protection to life
Life rarely unfolds in a straight line. That's why your term life insurance should remain flexible. Ideally, the term should be chosen to end when the children are expected to earn their own money. Often, the age of 25 is a good anchor point to also cover university studies. Choose between two models for the insurance sum: the constant sum and the decreasing sum.
A decreasing insurance sum can be sensible if wealth is being built up in parallel or a mortgage is being repaid. As the financial need for childcare decreases with the children's age, the required coverage reduces as well. This saves on monthly premiums. Also, pay attention to guaranteed insurability options. These allow you to increase the insurance sum without a new health examination for important events like the birth of another child or purchasing a property. At nextsure, we place emphasis on ensuring your coverage grows with your life's stages.
Common Mistakes in Securing Non-Working Parents
Do not under any circumstances completely forgo insurance for the parent at home. However, there are pitfalls even with existing policies. Inflation is often underestimated. An amount that suffices today may be too little in ten years due to rising living costs. Another important factor is the medical examination. Many people delay taking out a policy, but as age increases or after pre-existing conditions, premiums rise or it becomes more difficult to get coverage.
The state widow or widower’s pension generally only covers a fraction of the costs. This pension is also dependent on income. If the surviving partner has a good income, their own earnings are offset against the pension, which further reduces state support. A private term life insurance policy is therefore the only reliable pillar to guarantee the children’s standard of living in the long term.
Why nextsure is your digital companion for family protection
At nextsure, we connect digital processes with personal advice. Our process is as simple as your daily online banking. We know that parents have little time. That’s why our application process for term life insurance is digital, transparent, and without any fine print.
We check the market rates for you, especially focusing on customer-friendly conditions such as the absence of abstract referral and fair health questions. As a digital insurance broker from Hamburg, we stand for honest advice. We don't sell off-the-shelf products, but rather solutions for your family. Trust nextsure to secure the most important thing in your life: your children's future.
More useful links
Finanztip - Term Life Insurance: Protecting your Partner and Children provides information on this topic.
FAQ
What happens to the insurance when I start working again?
The insurance remains in place. You can adjust the amount if necessary. If your income increases, it might even be sensible to raise the amount to secure your new standard of living.
Do I need to see a doctor for the term life insurance?
In most cases, answering health questions in the online application is sufficient. Only for very high insurance sums (often from 500,000 euros) or pre-existing conditions may a medical examination be necessary.
Can I change the insurance amount at a later date?
Yes, many policies at nextsure include insurance guarantees. These allow an increase in the amount for events such as marriage, the birth of a child, or the purchase of property without needing another medical examination.
Who should be listed as the beneficiary?
Usually, this is the partner who has to bear the costs for childcare and household in an emergency. In the case of cross-insurance, the partner is already the policyholder and therefore the recipient of the benefits.
Is there a term life insurance without medical questions?
There are hardly any genuine rates without health questions, as the risk for the insurer would be too high. However, there are promotions with very simplified health questions, especially for young parents or property buyers.
