The unpaid parent can be a family’s greatest insurable risk

Most parents will worry about money at some point, it’s par for the course of having children.

Having a family can change the dynamics of how you manage and view your finances. It may be that you become a household that brings in just one income, or perhaps both parents continue to work, but there are new costs to bear, such as childcare.

Questions which may once have been shrugged off, such as how the bills will be paid if the main income earner were to become ill, are often considered with new focus and protection policies put in place.

It’s easy to see in pounds how much the income earner contributes, but it is not so clear to see how a stay-at-home parent provides economically to family life.

When one person stops working to bring up children, they step into a valuable unpaid role.

Being a homemaker and child carer may not sound glamorous, but the financial value to the family is significant. Without their contribution, the cost of hiring in a housekeeper, cook and full-time nanny could run into hundreds of pounds each week.

Whilst parents may be good at insuring the lives of income earners, arranging adequate protection for a stay-at-home parent, is often not considered. Should the person who takes the caring role become ill, or even die, there is often nothing in place to financially cover the cost of picking up the pieces.

There are a number of insurance products available, which can provide protection for an unpaid parent, and will safe guard against the risk of ill health or death.

At Sanlam, we believe that financial planning is all about being prepared for the future and ensuring you have the right protection in place should difficult times arise. If your family has a stay-at-home parent, here are our tips on how to establish their financial contribution to your home.

1. If a stay-at-home parent became ill or died, then childcare could be needed in order to allow the earning parent to continue working. Childcare can range from anywhere between £4 and £12 an hour. Calculate the hours you would need each school day and also factor in the minimum of 13 weeks holiday a year each child receives. Children under school age would need full-time care. You may be eligible for tax credits in this situation, which could assist with these costs.

2. Would you be able to work full-time, care for children and manage a home? Help with cleaning, ironing and gardening starts from £9 an hour and could be needed to help relieve some of the situational pressure.

3. Cooking for a family takes time. Stay-at-home parents often manage on a fixed food budget because they cook from scratch. Working fulltime typically means you can’t do this on top of the Brownie or Cub run and getting the washing done. Either paying for someone to cook, or increasing the cost of your supermarket shop to include ready-made meals, needs to be factored in.

4. Consider the support and help that you have around you. Friends are unlikely to provide you with free childcare or home cooked meals for the long-term, but family members and close friends may well rally round if a stay-at-home parent became critically ill. Similarly, Grandparents who live close by may take on a more active role in the event of a difficult situation.

5. Look carefully at your own financial security. How would your family cope if the remaining parent also suffered a long – term illness or even worse, if your children had to cope with neither of you? Permanent Health Insurance and/or Critical Illness Cover become more important for a sole parent with a young family. Not only will bills have to be paid, but without sufficient income the scope for making retirement provision will reduce enormously. It is a good idea to talk to your financial planner about insurance products in the context of your wider finances before purchasing.

This article is for information purposes and should not be treated as advice. Individual circumstances should always be considered prior to purchasing any financial products. For further information please contact your Wealth Planner

Sanlam is a trading name of Sanlam Wealth Planning UK Ltd (Reg. in England 3879955) and English Mutual Ltd (Reg. in England 6685913). English Mutual Ltd is an appointed representative of Sanlam Wealth Planning UK Ltd which is authorised and regulated by the Financial Conduct Authority.

If you would like to find out more about insurance products to protect families then speak to your financial planner, if you don’t have an appointed adviser please email us at letstalk@sanlam.co.uk.