Insure the stay-at-home parent

Maintaining a home isn’t cheap

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.

When discussing wealth protection with couples, it’s important to place a value on the contribution of both partners, not just the 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 breast cancer. The news was just devastating. Her treatment 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 advisor recommended and implemented comprehensive insurance for Gary and trauma insurance for Sally. The moment she was diagnosed with breast cancer, their insurer paid out a lump sum benefit to the family. The money helped Gary meet mortgage repayments and maintain their family budget. This also allowed Gary to take time off work to run the household, ensure Jack was looked after and focus his attention on helping Sally fight the disease.

Courtesy of Aviva – Putting Protection First Brochure