Just because a stay-at-home parent doesn’t earn a salary, it doesn’t mean it wouldn’t hurt their family financially if they were to pass away.
In fact, the site www.msn.com puts the value of a homemaker at just under NZ$50,000 per annum!
So what would happen if this key person in your home were to pass away? Some of the key costs that you may need to cover would include:
- ? Child care: Day care centres for young children are not cheap and a full time nanny is even more expensive. Typically they run at $200 per week, amounting to $10,400 a year. Even if children are at school, arrangements may have to be made for after-school care.
- Chef duties: Due to work commitments, adding cooking to your daily routine can be quite impractical. Cooks can be hired at around $100 per week to cook your meals in advance. This can cost up to $5,200 a year.
- ? Maid service: Cleaners cost about $25 per hour and are typically engaged for three hours per week. That’s just under $4,000 a year.
- ? Counselor: Counselling services for family members should also be taken into account. Not only is the homemaker the one who cooks, cleans and babysits – they are also the heart of the home. Losing them can be emotionally devastating and counselling is often required. At upwards of $250 per hour, this can end up costing thousands.
You must also take into account the disruption to the surviving spouse/partner’s work and possible loss of income.
They are unlikely to go straight back to work after the funeral, and taking a couple of months off is not uncommon.
For an income of $100,000, that could mean $15,000 to $20,000 in lost earnings.
The combined cost of all of these services could obviously devastate the average middle-income family with no life insurance coverage for the stay-at-home parent.
Essentially there are three possible solutions for families that suffer the loss of a stay-at-home spouse:
1. Pay the expenses out of savings. But how long would these last?
2. Add to the mortgage. But can you afford to do this now that you have these additional expenses to cover?
3. Life Cover. This can be the most reliable option of the three.
Do you have enough cover?
When people first take out life insurance they assess all of their current needs – mortgage, funeral expenses and other debts.
But often people forget to review their insurance needs on an ongoing basis.
Reviewing your insurance regularly is crucial, especially when you start to have a family and have more to protect.
Having a regular check-up is what an adviser is for, so if you haven’t looked at your insurance for awhile, then it might be time to book one in.
Source | TOWER Health and Life
