Stay-at-Home Mothers Still Need Life Insurance
The decision to leave the workforce and become a full-time mother is often a hard one for women to make, and can also have very costly consequences if the right precautions are not taken. Sometimes life insurance cover just doesn't seem to be a priority.
There is a significant financial risk posed to stay-at-home-mothers due to their loss of income. Although most women leave the workforce intending to return to it later on, few realise how circumscribed their chances of re-entry will be, or what a steep financial price they will pay for their time out.
This information gap is so dramatic that women often make these crucial life choices in virtual ignorance of the long-term consequences. But the unfortunate truth is that most of these women will be blind-sided by painful challenges in the years to come.
Half of them will get divorced; others will have to cope with a spouse's illness, incapacitation or premature death. Then there's unemployment and if the second parent should lose their job at some point it could have a catastrophic effect when they are the family's only breadwinner.
When you add up all the risks, it becomes clear that most women who relinquish their financial independence by quitting work will eventually find themselves on the wrong side of the odds. The consequences for them and their children could be enormous.
According to a new report from a leading insurer in life insurance, the value of a mother's work in the home has doubled over the last 25 years to an average of 24,456 per year.
The study from a leading university shows that if a mother was paid for her work, she would earn 2,500 more than the average starting salary for a graduate. Women would have to be paid 470 per week to cover the 66 hours of chores they complete, almost double the amount men manage (34 hours).
Most people underestimate the cost of a mother's weekly worth which has led to under-insurance among British families as only 25 per cent of men and 17 per cent of women have insured their own lives through life insurance.
The financial value of a mother's work in the home is often undervalued, especially when it comes to ensuring a family could cope financially if a parent died.
The research aims to highlight the need for family protection, as many people do not realise that in some cases for as little as 6 a month, you could buy yourself around 100,000 of life cover.
It is almost more important to cover yourself with life insurance should you become a stay-at-home-mother because there are minors depending on you. Even though you may have no income to protect, your spouse could find the added cost of paying someone to look after the house and children a financial burden.
Should something happen when are working as a full-time mother and you are on only one salary, you could find it very hard to get by during any grieving period or added costs of childcare, schooling and general maintenance. This is why it is worth having some degree of Income Payment Protection.
Income Payment Protection is an insurance contract that will pay a monthly income if you cannot work usually due to accident or sickness.
There are two forms of Income Payment Protection: Long Term and Short Term. A short term plan will pay a monthly benefit upon receipt of a valid claim for a maximum of 12 months (some companies offer 24 months), where a long term plan can pay a claim up until your selected retirement age (50-70).
Both life insurance and income protection are invaluable when you have dependants and most likely the financial burden of a mortgage and other loans and credit cards and under estimated the value of a stay-at-home-parent could be a costly mistake should something happen.
Alan Knight writes for protected.co.uk, a UK life insurance firm that can search and compare hundreds of life insurance plans in minutes. Go to protected.co.uk right now!
Source: http://ezinearticles.com/
Added: March 21, 2008
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