Insure the stay at home parent

by Andrew Newman
in Insurance
29 Jul 2010 | 0 Comments

Families typically insure only the main breadwinner in their household. They often overlook the financial value that a stay at home parent adds towards raising children and maintaining a home.

In financial terms, the non-paid work of house-keeping, child rearing, cooking and all the other domestic duties required to keep a house running can be easily ignored. Furthermore, the possibility that either partner in a marriage should suddenly be unable to work due to illness or injury is seldom considered.

A report by the Australian Institute of Family Studies* found that the value of a woman, aged 25-44 years, managing housework, shopping and looking after children was $45,617 per annum.

If you calculate this over 20 years (without factoring in CPI), then it works out to be $912,340. And this does not include the cost of raising and educating children.

For couples considering wealth protection, it's important to place a value on the contribution of both partners, not just the main breadwinner.

Case study

Gary and Sally have been married for a couple of years and have a one year old son, Jack. When Jack was born, they decided that Sally would take a career break and stay at home to raise their son and look after the family home. Gary would continue in his job as an accountant.

About a month ago, Sally was diagnosed with a terminal illness with only a few months to live. The news was just devastating. Her hospitalisation forced Gary to make major changes to their lifestyle. He had to take time off work to find a babysitter for Jack, a cleaner for the house and still pay the mortgage and bills.

Just before they married, their financial adviser recommended and implemented comprehensive insurance for Gary and Life insurance for Sally. The moment she was diagnosed with the terminal illness, their insurer paid out a lump sum benefit to the family. Although it was little consolation, the money helped Gary make immediate arrangements for the family home and Jack to be looked after. Gary could therefore focus on getting the best medical treatment for Sally.

Did you know?

You can insure the homemaker for up to $1 million for Life, Total and Permanent Disability and Critical Illness without the need to provide financial evidence. Should you require a higher sum insured, the insurance company would be happy to consider the application.

* de Vaus, D.; Gray, M. and Stanton, D.: Measuring the value of unpaid household,caring and voluntary work of older Australians; Australian Institute of family
Studies, Research Paper No 34, October 2003.

The above information has been sourced from Norwich Union Life Australia Limited.

If you would like to secure the financial future for you and your family, then I urge you to have your insurance cover reviewed.

Important Information

Information provided in this newsletter is general in nature and does not constitute financial advice. While I have taken reasonable care in providing this information, it should not be construed as being specific to your investment objectives, financial situation or particular needs. It's important for you to consider these matters before making any financial decision and I recommend you seek financial advice.

Insure the stay at home parent

Leave A Comment