Q. As a stay-at-home parent, is there any point in buying life insurance? 

A. Absolutely. A lot of people think of life insurance as something to buy when you have a mortgage. For many, it’s essential because you want to make sure that if you die, your family can keep their home. 

But for a stay-at-home parent without a mortgage or any significant debts, you might wonder if there is any point in life insurance, after all you are not bringing income into the home.

However, whilst you are not bringing an income into the home you are saving a massive outgoing in terms of childcare costs, cleaning, household management and more. So you need to ask yourself, how would your family cope if you weren’t there?  

If you died your family would either need to hire help to do the things you used to do, or if you have a partner they might need to reduce their working hours and their income will drop, or they might stop working altogether.  

Figuring out how much life insurance you need can be tricky. When I assess someone’s need for life insurance the key things are if they have a mortgage liability and if they have dependent children.

Working or being a stay-at-home parent kind of comes later in the discussion as the need for life insurance is about whether there are people that rely on you, not what you do for a living. 

There are a few different options: 

• Term life insurance: a good guide is to take the annual household income and multiple it by 3, 4 or 5. This will give 3 years, 4 years, or 5 years’ worth of your household income in one big cash lump sum. You would then usually plan on the life insurance being active until your children are an age of independence, such as 21. 
• Family income benefit: despite the name this is actually life insurance and it’s an annual income to your family if you die. So it isn’t a big cash lump sum of money in one go, it’s spread out over time. 
• Waiver of premium: this is an add-on you can choose to pay extra for and basically means that if you become really ill, the insurer will keep your policy active but not take any premiums off you until you are better again. As a stay-at-home parent you will usually be assessed on your ability to complete certain tasks to trigger this benefit such as preparing a meal or walking a certain distance.   
• Value added benefits: most insurers offer these extras to life insurance for you, your partner and your children. It can be things like access to GP appointments 24/7 over video call, mental health support, nutritionists and more. I have three young kids myself and these have been an absolute godsend at times. 
• Children’s Critical illness Cover: none of us ever want to think about our children becoming ill, but it does unfortunately happen. With some insurers you can include what is known as children’s critical illness cover on your life insurance policy. This policy can pay you a cash lump sum if your child is diagnosed with cancer, or a number of other conditions, so that at a time when everything will be awful, you don’t have to worry about your finances. 

Everyone has completely different needs when it comes to life insurance. As a parent it’s usually a good idea to arrange life insurance to make sure that your children will be financially secure, until they are grown up. Remember, that as a stay-at-home parent you are often working just as harder, sometimes harder, than someone in an employed job. Don’t downplay your worth! 

Kathryn is a specialist adviser for personal, business and group life insurance, critical illness cover and income protection, within the UK and internationally. Kathryn provides training, videos and podcast that are used within the insurance sector, charities and the public, as a way to educate about ways to access insurance.

Photo credits: Pexels

The post Do stay-at-home parents need life insurance?  appeared first on Mouthy Money.

There’s lots going on in my life at the moment. Last year I got married. We also bought a house. The first thing we did as homeowners was get a Labrador called Atlas. He’s totally mad and lovely.

When we bought our home we talked to the mortgage broker about life insurance, but after a slightly negative experience (and the fact we were also in the middle of planning a wedding) we put the conversation on the back burner.

Then this year my wife and I recently discovered the joyous news that we are expecting a baby in October. This focused my mind on getting life cover sorted, as it’s not just my wife (and Atlas) I’d leave behind, but potentially a child were the worst to happen to me.

Then I had a fateful call with a life insurance provider. They asked the usual questions and it went fine, but when we moved onto medical questions things quickly went awry.

Too big for life insurance

I am not a skinny bloke. I’ve always been husky as an adult, although in my 20s this was kept at bay mostly by playing sports etc. But I’ve never been ‘slim’ and when I do the NHS BMI test it tells me my BMI is way too high.

I’ve always been conscious of my weight and have done plenty of faddy diets that don’t last or training programs that don’t yield results (and tend to lead to burnout).

More recently, the pandemic was definitely a bad thing for my waistline but really only added to an issue that I wasn’t really addressing anyway.

At my heaviest I was 159kg. This was around the time we got married and just before we got a dog. Getting a dog (and having to walk him all the time) was excellent news for the scales and I lost around 8kg by the beginning of this year.

But then the fateful phone call for life insurance. I spoke to Vitality who were recommended to me by a friend. Their adviser was extremely helpful and very honest about why I would be turned down. Simply put, I’m too fat.

He told me that to be at least considered, versus my height, I’d need to be below 120kg. Anything above and I’d simply be denied. Of course, this weight is still high in overall BMI terms and I’d face higher premiums, so the lower, the better.

I don’t think I felt humiliated by the news. As someone who works in personal finance I was aware that my size would be an issue with a product like this, but I had never really faced it before. Hearing it laid out to me was important and I commend the adviser for his honesty.

Get fit for life insurance

Being turned down for life insurance is worrying, for my health and the security of my loved ones. I want to do the right thing for my growing family and protect them should something happen to me.

There is a kicker here that this situation collides with something else big that’s happening in my life at the moment.

I am preparing, with a group of friends, to climb Mount Kilimanjaro in February 2024, which I’m doing on behalf of Marie Curie in memory of my mum (you can check out my fundraiser for more on that).

So as luck would have it, I’m already on a concentrated path to getting fit and losing weight. I won’t go into the details as this isn’t a health and fitness blog, but it involves working out regularly and eating a lot less, basically. And sticking to it.

Kilimanjaro has given me a lot of motivation (that’s one of the reasons I signed up to it) but the life insurance issue has lit a fire under me in a way I’ve never had before.

The conversation I had with Vitality also helped crystallise some goals for me – I now have a tangible target I need to reach. The good news so far is I’ve lost around 14kg since March, putting me around 137kg at the moment.

Writing this deeply personal column is a form of accountability for me. I’m laying all my cards on the table in order to say I am willing to fix this problem of my own creation.

I’ve still got a lot of hard work to do, but I’ve never been more focused on achieving a health-related goal. Wish me luck.

Vitality has been contacted for comment.

Photo by Balazs Simon.

This article contains affiliate links. Affiliate links have no bearing on the editorial stance of Mouthy Money, but do help us fund our journalism and information we provide to readers.

The post Why I was turned down for life insurance – and what I plan to do about it appeared first on Mouthy Money.

Mouthy Money Your Questions Answered panelist Alan Richardson answers a reader’s question about their options when it comes to protection policies if one person gives up their job for childcare.

Question: I’ve just had my first baby at 34 and have decided not to go back to work. What insurance is available to help our family finances? My partner works full time, and I will be caring for our child until they are three when I plan to go back to work.

Answer: Deciding to put your career on hold so that you can be a stay-at-home parent is not an easy decision.

There are many aspects to consider and it’s great that you are scrutinising the financial ramifications of not only a reduced household income, but also depending on one bread winner.

One often overlooked aspect of giving up work is the loss of any work-based benefits you may have had. This could include life cover, sick pay, maternity cover, medical diagnosis and treatment, and other benefits such as annual leave.

Fortunately, in the UK we have one of the world’s leading insurance markets, offering a huge range of products, yet this can be daunting and at times confusing, so speaking with an independent adviser could be helpful.

Life cover is often a good starting point. This can pay out as a lump sum or as a regular income in the event of death (or terminal illness). Some people take both types of life cover, one to cover the mortgage and the other to providing a regular household income to pay for things such as household bills and childcare fees.

Whether you are married of not, ask your adviser or insurer to place your policy into trust. This will give you an element of control over who will ultimately benefit from any pay out, as well as outlining who would look after the money until a beneficiary was old enough to receive it.  

With life cover, you have helped instil an element of financial resilience for your family should you die. However, we are all more likely to become seriously ill before we die. Critical illness polices cover cancers, heart attacks, strokes, and dozens of other serious illnesses.

Although a cash injection isn’t going to necessarily fix the condition, having access to funds to cover the additional costs and reduce financial stress is useful. Many Insurers will also cover your children automatically. 

There is also income protection, which pays a tax-free replacement income if you cannot work, including those who do not work although the amount of cover is limited.

It is important to insure the main household income so you’re covered yet the cost of these policies vary greatly and the options can be amended to suit your budget.

Finally, Private Medical Insurance (PMI) is one of the fasted growing areas of insurance.

More than other policies, this insurance provides you with practical assistance to beat an illness, giving you access to comprehensive list of hospitals, consultants, and surgeons to attend privately. This allows you to get quicker diagnosis, early treatment, specialised medical care and medication to speed up your recovery.

While many couples set up protection policies up on a joint basis, advisers will often recommend arranging separate policies for a number of reasons.

This will depend on your budget but having two policies means you both have cover – as even though you’re not working the financial value of everything you’re doing including childcare costs will be substantial.

Furthermore, some policies encourage you to stay fit and healthy and may also include added benefits such as 24/7 virtual GP apps, lifestyle planning and second opinion diagnosis services, at no extra cost.

Alan Richardson is Head of Advice at LifeSearch.

Bio: Alan Richardson has worked across the insurance sector for over 25 years and is Head of Advice at protection specialists, LifeSearch. He and his family moved to the Cambridgeshire in 2020 and is loving the health benefits of the fresh country air as he walks to the local pubs.

Photo by Picsea on Unsplash

The post Do I need insurance if I become a stay-at-home parent? appeared first on Mouthy Money.