For a household’s main income earner, having children is likely the number one catalyst for purchasing a life insurance policy. The reasons are clear; without their main income stream, how would the family feed the children, pay the mortgage or pay off the car?
So while it is a common occurrence for families to insure the main income earner, many families fail to recognise the financial contribution of a stay-at-home parent, and the financial consequences should that parent no longer be able to contribute to the family.
It’s easy to recognise the value of a stay-at-home parent, however the actual cost of the tasks and jobs performed by the homemaker, may not be so clear. Child care, cleaning, laundry, meal preparation and grocery shopping, are just a few of the time consuming duties that a stay-at-home parent may perform. To put a dollar amount against each of these responsibilities, could easily equate to a full time wage.
With this in mind, the stay-at-home parent, alternatively known as the work-at-home parent, may also require their own life insurance cover.
Life insurance is designed to protect against financial loss in the event of a parent passing away (life cover), becoming disabled (total and permanent disability), or suffering from a critical illness or injury (trauma cover). In the traumatic time of a loved one passing away or becoming seriously ill or injured, properly constructed and personalised insurance cover can relieve the financial strain on the surviving parent; meaning they don’t have to worry about juggling home duties and retaining their job.
When calculating the amount to insure a parent for, the annual financial value of the services they provide should be used, although putting a figure on the value can be hard. By way of a case study, it is interesting to note that a home cleaning service, if used twice a week a week, would cost over $15,500 per year. Before and after school care would be between $6,000 to $12,000 per child per year; and then school holiday programs on top of that. How would your family cope with these extra financial pressures?
If you would like to discuss your life insurance policy, or review your current policy, please contact your insurance adviser.
This article was written by Paul Milbourne, Risk Adviser.