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Life insurance – not just for the breadwinner

Posted in: Finance Last updated: 20 Aug 2014

When considering who needs life insurance, naturally, the first thing that springs to mind is to insure the main breadwinner. After all, it’s their income that’s worth protecting right? In actual fact, if you take a closer look at what your partner contributes to your household, you might be surprised at how much you’d have to fork out without their support to hand.


Let’s not forget that we can still be dependent on someone’s contribution, even if it’s not financial. As the Jack and Jills of all trades – including cooking, cleaning and ferrying the children around, stay-at-home parents are one of the family’s most overlooked financial assets. In actual fact, if we were to put a price tag on their long list of duties, their roles as homemakers would be worth a sizeable salary of £32,812.[1]

The reality is, the loss of either partner is life changing – and with no life cover in place, the surviving other half may be left in the difficult situation of having to fill a potentially huge gap.

Let’s put this into context…

Barry & Maggie Smith are married with two children under five. Barry earns £45,000 and Maggie is a stay-at-home mum. They have outstanding debt of £10,000. They’ve considered buying life insurance but they’ve never got around to it.

"Whether you’re the chief bread winner or stay-at-home parent, having some plans in place can help to cover unforeseen expenses at what is likely to be a very sensitive time."

Unfortunately when you die your debt doesn’t die with you. So, if Barry died, Maggie would be left to deal with the debt on her own. As liabilities like mortgages, credit cards and loans are passed on to your family, family members may be left with a mountain of debt to deal with if there are no provisions in place.

Maggie will also be left without a main source of income. And whilst she may get financial support from other family members or the government, she may struggle to maintain the lifestyle she and her children enjoyed before Barry died, leaving her with no other choice but to return to work.

Barry would also be hard-pressed if he were left behind. Whilst his parents might be able to help out with childcare from time to time, he will need to make some sort of child care provision in order to continue working – a cost that easily mounts up.

If Barry and Maggie were to take out life insurance, they could help to ease some of the costs left behind when they die, allowing the family to focus on their emotional healing and get on with their lives.

Whether you’re the chief bread winner or stay-at-home parent, having some plans in place can help to cover unforeseen expenses at what is likely to be a very sensitive time.

Sources
[1] Legal & General, (January 2013), “Wanted: Hard working parent” [online]. Available from www.legalandgeneral.com

Note: Whilst we take care to ensure Hub content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions. OneFamily do not provide advice so it may be worth speaking to an independent financial advisor about your own circumstances.