This is a guest post from award-winning broker; Reassured
A stay-at-home parent is many things all rolled into one; parent, nurse, teacher, chef, cleaner, taxi driver, gardener, dog-walker, counsellor, personal shopper…the list goes on.
If you are a stay-at-home mum or dad, have you ever considered what your salary might be if it were a paid role?
Think about what an average day might look like:
- 3 hours cleaning
- 2 hours preparing and cooking food
- 1.5 hours cleaning and ironing clothes
- 1.5 hours food shopping
- 30 mins taxi service
- 30 mins helping the kids with school work.
According to an interesting article first published in the Mirror[1], which drew on research from Bidvine[2], a stay-at-home mum could be worth as much as £80,000-a-year.
According to other research from leading insurer SunLife[3], the financial risk to a family from the death of a stay-at-home mum is a more moderate £29,812-a-year.
Whichever figures you believe, it is clear that a stay-at-home parent is hugely important, not just from a practical perspective but also a financial one.
I do not need life insurance, I do not have a job
If you are a stay-at-home parent and do not earn a tangible salary, it can be easy to think that you do not need life insurance.
You might think that life cover is just to protect the family against the loss of a breadwinner?
After all, they provide the money to pay the mortgage, household bills and living costs each month.
NOT SO!
A stay-at-home parent makes an enormous, often underestimated contribution and should also be protected with life insurance.
Any family would be severely impacted, both practically and financially if you were no longer around.
In the event of your death or a serious illness, who would step in and help support your family?
Could you rely on grandparents?
If not, could you afford full-time childcare, a cleaner, taxis?
Or would your partner need to cut down on their work hours to help fulfil these roles?
What if you were on maternity leave?
According to research from The Money Charity[4], the average cost of raising a child to 21 years, is £30.23 a day.
That is a mind-boggling £231,713 over 21 years. What if you had 2 or 3 children?
Childcare fees
Take one of the more significant costs you need to cover should the worst happen, childcare.
The Money Advice Service[5] suggests the average cost of full-time childcare is £223.36 a week or £277.84 per week for those in London.
That equates to £11,615 or £14,448 a year, for 1 child under 2 years.
So why do so few stay-at-home parents have life insurance?
Given some of the figures displayed in this post you would think most parents, stay-at-home or otherwise, would have life cover in place.
However, in reality, just 1 in 3 stay-at-home mums have life insurance.
In fact, according to Legal & General, almost half of all UK parents do not have any cover protection.
A study by Legal & General published in 2016 identified the most common reason stay-at-home parents don’t take out life insurance is that it is ‘too expensive‘.
Followed by ‘it is too complicated‘, then ‘I am too young to think about dying’.[6]
Joint life insurance or 2 separate policies?
If you decide you need life insurance, you then need to decide between a joint policy or 2 single policies.
The main advantage of a joint policy is that it is approximately 25%-30% cheaper, compared with paying for 2 policies.
However, whilst it covers both you and you partner simultaneously, it will only ever pay out once (usually on the first death).
In the unthinkable scenario where both parents die together, a joint policy would probably not provide the protection your dependants require.
Once a joint policy has paid out it then expires, leaving the remaining partner unprotected or having to arrange a new policy.
Although, taking out 2 separate policies is more expensive it could result in 2 pay outs and double the coverage.
You are irreplaceable
Whether you work full-time or are a stay-at-home mum, the role you play is invaluable.
However, having adequate life insurance and receiving a lump sum payout could one day help you financially, at a time when your family are suffering.
Life insurance can enable you to:
- Clear the mortgage and thus remain in the family home
- Ensure family living costs are covered until your kids are financially independent
- Meet rising funeral costs
- Clear other outstanding debts.
If you are one of the millions of parents in the UK without any life cover, why not be proactive and secure a policy?
Freeing you up to get on with the fun things in life, like enjoying your family and friends, safe in the knowledge they are protected.
Not as expensive as you may think, (cover from 20p-a-day)
Many people misunderstand how affordable and easy to set up life insurance actually is.
You can set up life insurance to protect your family, until your children are independent, from as little as 20p-a-day.
If you arrange your policy while you are still young and healthy you can lock in very low monthly premiums.
For the price of a chocolate bar a day, or a trip to the pub a week, your family could be comprehensively covered, should the worst happen.
- Sources:
- [1] http://www.mirror.co.uk/lifestyle/family/mums-would-earn-80000-year-10067907
- [2] https://www.bidvine.com/blog/mum-salary/
- [3] https://www.sunlife.co.uk/press-office/stay-at-home-mums-do-almost-30k-of-unpaid-work-a-year-yet-two-thirds-do-not-have-life-insurance
- [4] http://themoneycharity.org.uk/money-statistics/september-2017/
- [4] https://www.familyandchildcaretrust.org/childcare-survey-2017 + https://www.moneyadviceservice.org.uk/en/articles/childcare-costs
- [5] https://www.moneyadviceservice.org.uk/en/articles/childcare-costs
- [6] https://www.legalandgeneral.com/life-cover/confused-about-life-cover/articles-and-guides/protection-life-insurance-poll.html
