Insurance for a non-working parent can be critical to a household’s recovery, explains Gayle Bryant.
Advisers, and the general public, generally understand the importance of taking out life insurance for the household’s main breadwinner: but what about the stay-at-home spouse?
There is less clarity about the financial impact on a family if anything happens to this key family member.
Just consider some of the tasks the stay-at-home spouse undertakes every day: cooking, cleaning, childcare, shopping, laundry and many additional outside activities such as ferrying children to school and gardening.
In 2017, OnePath paid out more than $930 million in life insurance claims, of which $494 million was paid to its retail channel. Of this, 8.4 per cent went to those who stated their occupation as being “home duties”.
For all claims, OnePath data showed the leading cause of death was cancer (32.4 per cent), followed by injury or accident (19.2 per cent), while cardiovascular issues formed 18.1 per cent of all life insurance claims.
Rebecca Hurford, a spokeswoman for ANZ Financial Planning, said the claim figure for those who classify their occupation as “home duties” isn’t surprising. They can be just as susceptible to misfortune as breadwinners.
“None of us are immune to a claimable event,” she says. “Just because you are a stay-at-home parent doesn’t mean something isn’t going to happen. We associate work with stress and high blood pressure, but you also have stress at home. Anyone can get cancer or have a heart attack.”
The importance of a stay-at-home spouse
Hurford says it is essential for stay-at-home spouses to be insured, as they are integral to the running of the household. “If you take the scenario of one spouse working and earning a good income, that changes if anything happens to the stay-at-home spouse,” she says. “It’s critical you have a contingency plan.”
Generally, advisers are well aware of this, and are including the topic in their conversations with clients.
“The good advisers in this market make it part of the conversation although there are probably times where we might put a reduced importance on it or the customers place a reduced importance on it,” says Hurford.
“But in the case of the client, this is because they don’t know what they don’t know. Advisers deal with these scenarios every day and should bring the topic up, however unpleasant.”
According to hipages Group, services provided by a stay-at-home spouse can equate to more than $90,000 a year. This includes daycare costs (in Sydney, between $69 and $160 a day), $125 to clean a three-bedroom house, property maintenance of around $1560 a year, and transportation costs ($4000 a year).
Making a case for stay-at-home spouse insurance
It’s clear the roles of the stay-at-home spouse are important, so how do advisers make sure they have adequate insurance?
“It’s there in front of us,” Hurford explains. “As an adviser you just need to just be aware of it and not be blinded by what a new customer is coming in asking for. You need to maintain a full focus on their whole circumstances.
(She adds there are also opportunities to contact existing customers to discuss this need.)
Many stay-at-home spouses underestimate the contribution they make to the household and this is why they’re often ignored when it comes to insurance.
“Advisers should be highlighting how having this cover in place gives you options,” he says. “It means you don’t need to be in a position where you have to make urgent or drastic changes. Instead, you can be thoughtful about what you do and how you do it.”
Advisers should make it clear that a claim payment could help pay the mortgage, school fees and other debts such as credit cards: “It can make the difference between selling the house and needing to leave the neighbourhood and an established network,” she explains.
While nothing can compensate for the emotional trauma of losing a loved one, life insurance can at least provide financial peace of mind – for the stay-at-home spouse as well as the main breadwinner.
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