Mum’s the greatest. But what if she couldn’t take care of the family?
“It won’t happen to me…”
Jenny, 37, and George, 41, had two young children and what seemed to be the perfect life. George earned $100,000 a year and travelled interstate frequently on business. Jenny was a stay-at-home mum and planned to return to work when both kids reached school age.
The couple saw a financial adviser to find out how best to protect the family should anything happen to Jenny. Their adviser recommended that they insure Jenny’s life for the value of the mortgage plus a lump sum to provide an income stream for childcare and school fees. They followed his advice, taking both Term Life insurance and some Trauma cover.
A year later, Jenny was diagnosed with cancer. When Jenny’s condition worsened, the couple used her Trauma benefits to pay off the mortgage and George decided to take a less demanding job to spend more time with Jenny and the children.
Eight months later, Jenny died. George took three months unpaid leave to look after their children. He hired a nanny and part-time housekeeper, and has set up trust accounts for the children – all
“A family losing a mother may find that the cost of home help and child care for very young children is in excess of $75,000 per year.”
Women spend around 6.6 hours per day on housework, shopping and looking after children.(1)
If a nominal value of $20 per hour were placed on this unpaid work around the home, a housekeeper employed to do the same amount of work would cost around $924 for a seven day week or $48,000 per annum.
Yet only 50% of female parents hold life insurance policies, more often than not through super. And only one in five full-time working mums has enough insurance to cover their income for three years or more, well short of recommended guidelines.(2)
While death is something nobody likes to think about, the sad fact is around 4400 Australian parents with dependant kids die each year and many more become sidelined as a result of illness or injury.(3) Unless you’re independently wealthy, the only way to safeguard your family’s financial wellbeing under these circumstances is by adequately insuring both parents.
• It costs $448,000 to raise 2 children from birth
• One in 11 women will develop breast cancer
before age 75. In 2004, nearly a quarter of
women diagnosed were younger than 50.(5)
• Australia’s divorce rate is at 48%. Women’s
disposal income falls more sharply than men
Life is full of surprises – good and bad. Insurance provides you with the ability to transfer the financial impact of some of the more drastic surprises that can happen. Insurance will never compensate for the loss of a loved one, or replace their role in the family, but it can help reduce the financial burden by providing the capital to ensure you and your family have choices.
(1) “Time Spent on Unpaid Work”, Australian Bureau of Statistics, 2001
(2) “Australian Mothers – Undervalued and underinsured”, IFSA Media Release, 5/10/2005
(3) “Fast Facts: A nation exposed”, IFSA Media Release, 5/8/2005
(4) AMP.NATSEM Income and Wealth Report, Issue 3, October 2002
(5) “The Cancer Council NSW Statistics”, www.cancercouncil.com.au
(6) AMP.NATSEM Income and Wealth Report, Issue 10 April 2005
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