The true value of a Mum

Published:
08 March 2012
Topic:
News,Insurance,Life

We all love our Mums and Mothering Sunday, which falls on March 18, gives us the chance to show just how much we appreciate them.  But being a parent is a tough job and it often falls on Mums to juggle everything including a career, housework and childcare.

The work Mums do

In fact, according to Legal & General's (L&G) most recent Value of a Parent research, while Mums are perceived to carry out around 18 hours of unpaid housework and childcare each week, the reality amounts to a whopping 71 hours. If a price was to be attached to all this unpaid work, it would amount to £30,032 - a competitive annual salary.

This throws up some important questions, such as would your family be able to cope financially if you or your partner were to become critically ill, or worse still, die unexpectedly?

Traditionally, it has been a common assumption that it's just the main breadwinner who needs to have life insurance in place. But one glance at these figures proves that it can be essential for stay-at-home Mums too - or even those who work part-time.

However, L&G's report showed that only half of parents surveyed had any life cover at all. And even fewer were covered with critical illness insurance or income protection.

Nearly a quarter (22%) of parents surveyed said if their partner were to die, they would have to rely on grandparents to look after the family, while 11% said they would need to give up work.  Without life or critical illness insurance in place, this would mean having to rely on state benefits.  And with the cost of bringing up a child (from birth to 18 years) amounting to a staggering £133,848, this could be a very daunting prospect.

How does life insurance work?

The subject of life insurance is too often avoided as death is too grim a prospect to consider. However, the benefit of investing in life insurance is total peace of mind that your family wouldn't be left struggling if the worse were to happen, which could be the best money you ever spend. So, if you are looking to buy a policy, what do you need to know?

The most basic type of life insurance is term assurance. You choose a term for the policy to run over and it guarantees a lump sum were you to die within this time.

The level of cover you need is something that will depend on your family's individual circumstances. Insurers tend to recommend a lump sum that would be about 10 times your annual salary - but of course, your premium will rise in line with the agreed pay out.

A number of factors will be taken into consideration when taking out life insurance such as your age, occupation and health.  Those with poor health can expect to pay larger premiums; smoking can seriously increase the premiums you pay.  If you give up, you will only be classified as a non-smoker if you have been cigarette-free for a full year.

Decreasing term assurance pays out less as the term goes on, working on the assumption that any debt you are servicing is also decreasing.

Level term assurance, however, pays out the same lump sum regardless of what point in the term it pays out, which makes it a more expensive type of cover.

It is also possible to take out a joint life insurance policy with your partner, with the lump sum being paid on the event of the first death. 

However, it is not always more expensive to take out separate policies with the advantage being that you can set different pay-outs to reflect your earnings.

You can learn more about life insurance in our guide and get a quote for your circumstances. If you prefer to speak to someone, you can call one of our team of whole-of-market advisers free on 0800 142 2023.

Critical illness cover

Working Mums may also want to consider critical illness cover. This will pay out a tax-free lump sum if you survive 28 days from contracting one of a list of serious illnesses which deems you unable to work.

Every critical illness policy will cover core conditions such as cancer, kidney failure and heart attack but you'll need to look at exactly what constitutes the condition in the first place. This can make for depressing reading but it's still crucial you read the small print carefully.

Learn more with our MoneySupermarket guide to critical illness.

Income protection

Income protection is another alternative. This type of cover provides a regular income if you are unable to work due to illness or disability - but the payment only lasts until you're well enough to return to work, or until the end of the policy term. 

However, not all income protection policies will cover you if you're made redundant. For this you will need Accident, Sickness and Unemployment (ASU) - a type of Income Protection that will generally only pay out for one or two years.

However, you will need to look carefully at any exclusions because, as well as ASU providing cover for you, the insurer will be certain to protect itself too. Always read the terms and conditions of the policy first so you know what you are buying.

You can read more about all types of Income Protection cover in our guide.

On a brighter note

With so much doom and gloom, it can all feel quite depressing. However, life insurance, critical illness cover or Income Protection is just a safeguard that means you can enjoy your life with without having to deal with these issues again.

In the meantime, you can enjoy total peace of mind. So on Sunday, spoil your Mum and make sure she puts her feet up. After all those hours of unpaid work, surely she deserves it!

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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