While millions of mothers across the country will celebrate Mother's Day on 14 March, the financial value that both working and non-working mothers bring to the home is often under-appreciated, says protection specialist LifeSearch
The impact of the loss of a salary is obvious, but the high costs of outside childcare or home help if a mother can no longer perform daily tasks around the house can be just as harsh, says LifeSearch.
To ensure the family finances stay healthy if mum can no longer work or look after the children, LifeSearch has drawn up a 3-point plan a cautious mother can take to ensure her family is protected if something happens to her that threatens the family's financial security.
1 - Consider a policy that pays an income
Not only can a regular income pay out more than a lump sum, but it can also be linked to the cost of school fees or home help. There are two main policies that offer a regular income:
Family Income Benefit (FIB) works the same way as a Life Insurance policy but pays out a regular income from the point of claim until the end of the policy, rather than a lump sum. Potentially it can pay out significantly more than would be received from a lump sum. See the premium rate table below.
Income Protection (IP) is the product that should be top of most people's list. Rather than paying out on death it replaces a salary if the holder suffers an illness or disability that prevents them from working.
IP is also available for housewives who are either not employed or who work fewer than an average of 16 hours per week on a regular basis - an important source of funds if hired help is needed.
2 - Don't rely on state benefits
Most people dramatically overestimate the amount of state aid they and their family will receive if they are taken ill or die. In fact, a 30-year-old woman earning £35,000 per annum would only be entitled to a maximum Employment and Support Allowance (which has replaced Incapacity Benefit) of £64.30 a week. That works out at £275.50 per month.
She may also get sick pay from work, but when that runs out there would not be much left to maintain the family lifestyle.
However for £26.21 per month (with Legal & General - quote based on female non-smoker in good health employed as an office manager) she could guarantee herself a monthly income of £1400, potentially until retirement at age 60.
3 - Take out single life cover, not joint life cover
Most people in a relationship make the common mistake of assuming that they should be looking at a joint policy. Although two single life policies cost a little bit more (roughly 10 per cent), they can pay out twice, whereas a joint policy will only ever pay out once. Also if the couple split up, they can each take their own policy with them.
"It is not just working women who should be thinking about protecting their finances,” said Matt Morris, LifeSearch senior policy adviser.
“The value that mothers provide to the home through daily activities is massively underestimated. Unfortunately very few consumers actually realise the choices that are available to them and many either buy the wrong product or get a bad deal."
Find out the latest Life Insurance deals by receiving our MoneyMaker newsletter.
