Term life insurance: protection for the parent at home
22.01.2026
10
Minutes
Katrin Straub
Managing Director at nextsure
Many families only insure the main income and overlook the enormous financial value of childcare. If the parent at home is no longer there, immense costs arise for household help and childcare, which are hardly manageable without term life insurance.
Topics on this page
The topic in brief and concise terms
Care work has a high market value: securing the parent at home is just as important as securing the main breadwinner in order to cover replacement childcare costs.
Save tax through structuring: Use the cross-insurance model to avoid inheritance tax, especially if you are not married.
Plan for indexation and term: Choose a term running until the children have finished their education and look out for guaranteed increases in cover for maximum flexibility.
The invisible pay cheque: Why care work must be insured
Not only earned income needs protection. In actuarial science, the value of unpaid care work is often underestimated, yet reality looks different. When one parent stays at home, that person takes on roles that would have to be paid for dearly on the open market: educator, cook, cleaner, logistics coordinator and manager of family life. According to current data from the Federal Statistical Office (2024), women in Germany do on average around 44 per cent more unpaid work per week than men, which in families with children often accounts for the majority of the organisation.
If this parent were to die, the surviving partner would still have to work to secure the household income. This means the unpaid work previously contributed in the home would have to be replaced by external support. A professional nanny or domestic help costs in Germany in 2025, depending on the region, between 25 and 35 euros per hour. If this is extrapolated to a 40-hour week, monthly costs of more than 4,000 euros are incurred. A term life insurance policy absorbs precisely this financial shock and ensures that the children can continue to be cared for in their familiar surroundings.
Replacement costs: Professional childcare is significantly more expensive than child benefit or state subsidies.
Stability: The sum insured enables the surviving parent to reduce working hours in order to be there for the children.
Protection against poverty: Especially in single-earner models, the risk of financial distress without term life insurance is extremely high.
The right sum insured: How to calculate your needs
The calculation of the sum insured for the stay-at-home parent follows a different logic from that for the main earner. While with earned income one usually applies 3 to 5 times the gross annual salary, for care work the actual replacement costs must be calculated. A solid guideline for 2025 is a sum that covers at least €50,000 per year for the duration of the planned care period. If your youngest child is, for example, three years old and you want cover until the age of 18, this results in a period of 15 years.
In this case, at least €750,000 makes sense. That sounds like a lot, but consider inflation and rising wage costs in the service sector. A higher sum also gives the partner the necessary buffer to reduce their working hours. At nextsure we recommend planning a little more generously, as the premiums for term life insurance are comparatively low in good health.
Determine the years until the youngest child's financial independence.
Set a realistic hourly rate for a housekeeper/nanny (approx. €30).
Multiply the requirement by the term and add a buffer for education costs.
The cross-insurance policy: skilfully avoiding tax traps
A crucial detail in term life insurance is how the contract is structured. Many couples make the mistake of having the insured person also be the policyholder. In the event of a claim, the insurance sum then becomes part of the estate. While spouses do benefit from high allowances of EUR 500,000, inheritance tax can quickly become due with higher sums insured or additional property assets. This is particularly critical for unmarried couples, whose allowance is only EUR 20,000.
The solution is the so-called cross-insurance arrangement. Here, Partner A is the policyholder and pays the premiums, but insures Partner B’s life. If Partner B dies, Partner A receives the sum directly from their own policy. As this is not an inheritance, no inheritance tax is due. This model is standard at nextsure in our advice, to ensure that the money ends up where it is needed: with the family, without deductions by the tax office.
Term and flexibility: Adapting cover to life
Life rarely follows a linear path. That is why your term life insurance should also remain flexible. Ideally, the term should be chosen so that it ends when the children are expected to be earning their own income. Often, age 25 is a good reference point for also covering the period of study. Choose between two models for the insured sum: the constant and the decreasing sum.
A decreasing sum assured can make sense if assets are being built up in parallel or a property loan is being repaid. As the financial need for childcare decreases as the children get older, the cover required also reduces. This saves on monthly premiums. Also look out for guaranteed insurability options. These allow you to increase the insured sum following important events such as the birth of another child or the purchase of a property, without a new medical assessment. At nextsure, we place value on your protection growing with the different stages of your life.
Common mistakes when providing cover for non-working parents
Do not, under any circumstances, do without cover for the parent at home entirely. However, even with existing policies there are pitfalls. Inflation is often underestimated. An amount that is sufficient today may be too little in ten years because of rising living costs. Another point is the medical underwriting. Many put off taking out cover, but with increasing age or after pre-existing conditions, premiums rise or acceptance becomes more difficult.
The state widow’s or widower’s pension also usually covers only a fraction of the costs. This pension is also income-dependent. If the surviving partner earns 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 for guaranteeing the children’s standard of living in the long term.
Why nextsure is your digital companion for family protection
At nextsure, we combine digital processes with personal advice. Our process is as simple as your everyday online banking. We know that parents have little time. That is why our application process for term life insurance is digital, transparent and without the small print.
We compare the tariffs available on the market for you and place particular emphasis on customer-friendly terms such as the waiver of abstract referral and fair health questions. As a digital insurance broker from Hamburg, we stand for honest advice. We do not sell you off-the-shelf products, but solutions for your family. Put your trust in nextsure to protect the most important thing in your life: your children’s future.
More useful links
Finanztip - Term life insurance: providing financial protection for your partner and children offers information on this topic.
Literature
FAQ
What happens to the insurance if I start working again?
The policy remains in force. You can then adjust the sum if necessary. If your income increases, it may even make sense to increase the sum to protect your new standard of living.
Do I need to see a doctor for term life insurance?
In most cases, answering health questions in the online application is sufficient. Only for very high sums insured (often from €500,000 upwards) or pre-existing conditions may a medical examination be required.
Can I still change the sum insured later?
Yes, many plans at nextsure include guaranteed insurability options. These allow the sum insured to be increased in the event of life events such as marriage, the birth of a child or the purchase of a property, without a further medical assessment.
Who should be entered as the beneficiary?
As a rule, this is the partner who would have to bear the costs of childcare and running the household in an emergency. With cross-insurance, the partner is in any case the policyholder and therefore the recipient of the benefit.
Is there term life insurance without medical questions?
There are hardly any genuine policies without health questions, as the risk would be too high for the insurer. However, there are promotions with heavily simplified health questions, especially for young parents or property buyers.
