Life Insurance For Stay At Home Mums
For many years Australians felt that life insurance was only important for the working partner, however an increasing number of families are seeing the importance of insuring the stay-at-home parent.
It’s easy to see how we fell into the trap of thinking that life insurance was only important for the working partner, since they were the ones bringing the income into the household, but what about the value of the work conducted by the stay-at-home parent?
As a stay-at-home parent, how would your family cope if you couldn’t manage the household due to illness, injury or even your death? Would your partner be able to continue working full time and take on all of your duties as well?
The best way to demonstrate the importance of insurance for a stay-at-home mother or father is to look at a made up case study of what could happen to a typical Australian family.
Mark and Wendy were both aged in their late thirties and had three young children under the age of ten. Mark worked full time and Wendy was a full time Mother, whilst two of the children were still at home and one was in primary school.
At age 36 Wendy was diagnosed with an aggressive form of cancer and was immediately admitted to hospital for surgery to be followed by intensive chemotherapy and other treatment.
Sadly Wendy lost her battle with cancer after just 18 months, and Mark was left to cope with the huge loss as well as having to raise three young children on his own whilst battling to pay the medical bills and the mortgage.
Thankfully Mark and Wendy did have a comprehensive insurance plan in place, but first let’s consider what would have happened without insurance.
Like many Australian families, Mark and Wendy put most of their savings into their home and the mortgage, and as a result didn’t have a huge amount of cash sitting in a savings account.
Mark may have used up all of his annual leave to spend time with Wendy and to look after the children, however this soon ran out and he had to return to work in order to pay the mounting medical bills and of course the mortgage.
In order to be with Wendy at important times Mark had no choice but to take days off work without pay, which put considerable stress on the family budget. Thankfully Mark was able to rely on family support to look after the children as much as possible.
By the time Wendy lost her battle, the family’s financial situation may have been in serious trouble, with credit cards stretched to their limits and the mortgage two months behind in payments.
Mark tried to shield Wendy from their family’s financial troubles, however as her health continued to deteriorate she was still very aware of the bleak financial future that her family faced.
Thankfully Mark and Wendy had taken the advice of their financial adviser to put in place a comprehensive yet affordable insurance package for both of them.
Upon the initial diagnosis, Wendy received a payout of $400,000 from her trauma insurance policy. From these funds they were able to put the mortgage two years into advanced payments, which took away all financial stress of paying the mortgage.
The large sum of money received also allowed Mark to switch from full time to part time work, which enabled him to spend more time with Wendy and the family. They were also able to use some of the money to take short family holidays whilst Wendy was still well enough to travel.
After six months Wendy’s illness was deemed to be terminal, which was terrible news for the family, however it did trigger Wendy’s life insurance payout of a further $400,000. This additional money allowed Mark to take twelve months leave without pay so he could spend every moment with Wendy.
Wendy still lost her battle with cancer, however her final 18 months of life were made considerably better thanks to the financial stress being completely removed, and finally having the money to do the things as a family that they had always wanted to do.
After covering all medical and funeral expenses there was still $200,000 left from Wendy’s trauma insurance and life insurance payouts. This money was put into a trust fund to cover the children’s education and house deposits. It was Wendy’s way of helping the children even though she wouldn’t be there in person.
This article is about life insurance and is general information only. It should not however be treated as factual, as personal advice or be the basis of purchasing any insurance policy. Before deciding on an insurance policy read the PDS carefully and talk to a licensed insurance agent if you need further assistance. MoneyBuddy does not recommend insurance products or provide personal advice in regards to insurance products.