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Why life insurance policy could be right for a stay-at-home parent


The role of the stay-at-home parent is normally dismissed, simply because he or she receives no income or pay slip. However, if that parent is unable to function, for example, after becoming disabled, the household will then need to cover the costs of what that parent covered, whether day care, cleaning, cooking, and driving children to school. In addition, there will be the cost of looking after him- or herself. This may be unaffordable to the other parent.

It is not solely in the case of disability that life insurance can offer some relief. Should death occur, or parents experience critical illness or trauma, this may mean that they have to have help with their everyday activities. As such, life insurance becomes part of financial planning.

 The Salvation Army recently released a study indicating that there was a 93.3% rise in carers requesting their services ((http://www.medianet.com.au/releases/145748/). Furthermore, MoneySmart calculated that the average credit card debt in Australia is around $4200 (https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock).  It is therefore understandable that a lump sum would come in handy to cover this type of debt, aside from paying for medical bills and funeral costs.

How to work out the value of a stay-at-home parent

To decide how much cover is needed, use an online life-insurance calculator. For instance, if you are contemplating a 20-year policy, with a lump sum payout of $500 000, a 35-year-old woman in good health will pay around $19 each month. 

What to look out for when evaluating life insurance

With various life insurance policies available, by using a comparison website such as savvy.com.au, you can easily filter through the maze to find a product that will work for you and your budget.
One aspect to take note of with term life policies, for instance, is level premiums. Level premiums imply that monthly costs will be pegged, and you can stay within your budget.

Besides spending a fixed amount monthly, make sure it’s spent wisely. Your life insurance cover should be relevant to your circumstances. If it includes malaria cover, for instance, and you live in Southern Australia, this will be unnecessary expense. What could be relevant is to add your children to the policy − some companies allow this. 
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