Creating and protecting your wealth
  
  07.06.2020

Mum's the greatest. But what if she couldn't take care of the family?

 

"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." (1)

 

Women spend on average 33.75 hours per week on housework, shopping and looking after children. (2) If a nominal value of $30 per hour was placed on this unpaid work around the home, a housekeeper employed to do the same amount of work would cost around $1,020 for a seven day week or $53,040 per annum.

 

Yet only 50 per cent 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. (1)

 

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.

 

Life's facts
 
It typically costs $537,000 to raise two children from birth to age 21 years. (4)

 

One in four women will be diagnosed with cancer before the age of 75. (5)

 

In Australia, women over 40 years of age have a one in three chance of developing coronary heart disease. (6)

 

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.

 

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 sought advice 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 made possible by Jenny's Term Life insurance policy.

 

Answer the following simple questions: Yes No

  1. Do you have a mortgage?
  2. Do you have any personal loans?
  3. Do you have any credit card debt?
  4. Do you have dependants?
  5. Would your financial position be affected if you were to suffer from an illness or injury (remember you would need to have enough capital to fund medical expenses and the ability to take time off work to recover)? 
  6. Do you want to have enough capital to look after your dependants if you were unable to care for them for an extended period of time or perhaps indefinitely?

 

If you answered yes to any of the above questions, then you should seriously consider speaking to SME Financial Services Risk Services Adviser about a personal risk management plan.

 

 

What is Term Life Insurance?

Term Life Insurance pays a lump sum on your death or diagnosis of a terminal illness. Life insurance benefits can pay off the mortgage and other debts, provide for your children's current and future education needs, and act as a safeguard for your family's financial wellbeing.

 

Life insurance is usually available from age 10 to 69 and it covers you to age 99. You don't need to be in the paid work force to apply for Term Life Insurance.

 

What is Trauma Insurance?

Trauma Insurance pays a lump sum on the diagnosis or occurrence of one of a list of specified injuries and illnesses such as heart attack, cancer or stroke. The full list of conditions covered a policy is available in the Product Disclosure Statement of the Insurance company.

 

Trauma Insurance is about providing you with choice and flexibility. So if you want to make temporary or permanent lifestyle changes, such as reducing working hours, spending more time with your family, or just doing more of the things you enjoy, you can. You don't need to be in the paid work force to apply for Trauma Insurance.

 

What is Income Replacement Insurance?

Put simply, if you are unable to work because of an illness or injury, it provides you with a monthly payment to replace lost income.

In order to be eligible for Income Replacement Insurance you must be engaged in full-time employment (usually for a minimum of 26 hours per week).
 

The premiums for Income Replacement Insurance are generally tax deductible.

 

 
SME Financial Services' Risk Adviser can assist you to understand your protection needs. Together, you can create a plan to ensure you're covered against the unexpected contact us.
 
The information on this page is for general information only. For personal advice you need to sdpeak with an SME Financial Services Risk Advisor.
 
 
Source:

1 "Australian Mothers - Undervalued and underinsured", IFSA Media Release, 5/10/2005.

2 "Time use survey - Australian Social Trends", Australian Bureau of Statistics, 2006.

3 "Fast Facts: A nation exposed", IFSA Media Release, 5/8/2005.

4 AMP.NATSEM "Cost of Kids report", Dec 2007.

5 " Australia's Health 2008," Australian Institute of Health and Welfare 2008.

6 The CSIRO Healthy Heart Program

 

 

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