Does a Stay-at-Home Spouse or Parent Need to Get a Life Insurance Policy?
Find out what the important factors to consider are and how spousal life insurance can affect your family’s future in the South African context. Does a stay-at-home spouse need life insurance? Let’s find out.
Couples across the nation face the same questions when starting a life together. Who sleeps on which side of the bed? Who should wash the dishes? Will one of you become a stay-at-home parent while the other brings in an income? What medical insurance will you get and do you both need life insurance? Not getting life cover for both spouses may seem like an easy way to save money. Here’s what you need to know about life insurance for stay-at-home spouses in South Africa.
Should Both Spouses Have Life Insurance?
Yes, ideally both should have life cover, but the truth is that stay-at-home spouses are often underinsured. This is because most people who get life insurance view it as a means of replacing their salary should they pass away. When both partners work, covering that financial income is easy to accept. When there is just one breadwinner, the choice becomes a little less clear-cut.
In order to protect the remaining spouse and the family from financial loss, the household income earners in the family are usually covered first. The thought pattern is that a stay-at-home spouse does not make a financial contribution, and therefore should they pass away, income replacement isn’t necessary. The truth, however, is that life insurance does a lot more than just cover the loss of income. It’s there to make sure your family can continue to function in the way that it has been, even if one or both of you pass away.
How a Stay-at-Home Parent Contributes to the Home
Stay-at-home spouses are usually not idle even though they aren’t seen as income providers. They have many responsibilities and take care of a lot for the family. A stay-at-home spouse is often a chef, launderer, and cleaner. Sometimes they are also a bookkeeper and interior designer for your home spaces.
More often, the responsibilities of a stay-at-home spouse involve parenting and child care. A parent is a caretaker, a nanny, and a tutor. Stay-at-home parents chauffeur the kids to school and extracurricular activities, coach them, nurse their wounds, pack their meals, and offer therapeutic support.
If a stay-at-home parent should pass away, the remaining spouse may need to hire a list of professionals to replace these lost services. They would have to pay child care costs, funeral expenses, and more. While life insurance could never replace the loss of a spouse, it can help alleviate the extra financial burden of hiring in help. With the money the policy pays out, the remaining spouse can hire in help in the form of an au pair, domestic help, transportation, therapy, and more.
When is the Right Time for a Stay-at-Home Spouse to Get a Life Insurance Policy?
When you have just finished your tertiary education, you may not need life insurance quite yet. When you get into a serious relationship with a lifetime commitment such as marriage, it’s time to look at your life cover options. This is because people who get married often move in together or buy a house together. Their commitments change, and they provide together for a household instead of just for themselves.
Couples also often need to make financial room for the ability to care for elderly or distressed family members in the future. And, once you start considering having kids, Life Insurance will be vital. Life cover protects anyone who is dependent on you financially when you can no longer provide.
How Much Life Insurance Coverage Does a Stay-at-Home Spouse Need?
p>There is no fixed answer, although a minimum of R550,000 should be considered. Ask yourself how much it would cost to cover the payments for childcare such as a nanny or au pair until the kids are out of school. Remember to consider inflation in your calculations. Think about how much household duties such as cleaning, doing the washing, cooking, and even transportation will cost without your other half. Depending on your lifestyle, it could add up to millions of Rands.
Other Reasons a Stay-at-Home Spouse Needs Life Insurance
1. Bond Repayment.
Often, financial institutions will insist on life insurance to cover your and your spouse’s debt when you buy a house together.
2. Tax Efficiency.
<p”>Life Insurance payouts aren’t usually taxed, but sometimes the interest on it is. It can be a great way to secure your family’s financial future.
3. Savings Insufficiency.
It’s likely that your family doesn’t have enough savings. You may feel that you have enough to cover your family’s needs, but remember that inflation affects your money’s value. In the future, a million rand may do a lot less than it does right now.
As you age, the cost of living will rise, and unfortunately the current provisions from the South African government are insufficient to cover your needs in the future. This goes for stay-at-home spouses, too. When a stay-at-home spouse gets life cover, they protect the function and finances of the family.
Are you a stay-at-home mom, dad, or spouse looking for life insurance coverage from a good life insurance company? You can get free quotes online, including quotes for sole policies or joint policies. Joint life insurance policies often offer you brilliant cover with discounts and the convenience of only having to manage one policy instead of two.
DISCLAIMER: The information provided in this article is meant for informational purposes only and should not be construed as legal, medical, or financial advice. Facts stated in this article are correct at the time it was published.
Sources: Savings4SavvyMums; DaveRamsey;
