Stay Home Moms Put Family at Risk Without Life Insurance

January 26th, 2012 | Author: Mitch Reynolds

Do Stay Home Moms Need Life Insurance Protection?

Moms do lots of work – unpaid – for the family which needs to be insured

Mom need life insurance and critical illness insurance A great article was recently posted in Advisor.ca called Does Mom Have Enough Insurance? about Canadian mothers who live at home not having enough life insurance to protect their family. I think this is an important topic, as much to discuss the value of unpaid work provided by stay home caregivers (usually Mom) and our society’s devaluing of their contribution to the home.

Have you ever thought about how much money you would have to spend to replace Mom with a paid caregiver? Imagine Mom gets cancer and needs additional medical care and can’t contribute her “work” to the family any longer. How would your family cope without Mom doing the cooking, cleaning and driving the kids around town every day? Now imagine Mom dies, and will never again contribute to the family. In this article we will try quantify some of the costs of replacing Mom’s “work” to an average Canadian family.

What “Work” do Moms do?

Just because our society devalues stay at home Moms doesn’t mean their work is without a cost (as a side note, there are some stay at home Dads who care for children and do the housework, so for the rest of this article just consider yourself Mr. Mom). Very often while advising clients the stay at home Mom says, “I don’t work”. My answer to that is, “Then who takes care of the kids during the day and cooks and cleans?” Moms do a lot of work, but it just isn’t paid work, like a job as an employee or business owner. Let’s look at all the things Canadian Moms do at home:

Care for children all day long if they are below school age
Provide before and after school care for children
Cook meals for the family and clean the house – daily
Wash and fold laundry – daily
Drive children around the city for extra-curricular activities
Gardening, shovelling snow (not my wife but maybe you do it), grocery shopping
Etc., etc., etc.

If a husband thinks he can easily continue working full-time, putting all his mental and/or physical energy into his paid work, and be able to also do all these things in the evenings and weekends he is very mistaken. That is a recipe for burnout, a messy home, Kraft dinner suppers, and stinky clothes. Let’s take a look at home much it might cost to outsource this level of care.

The Cost of Replacing Mom

To pay for child care, cooking, cleaning and other things Moms do can add up to a lot of money quickly. If you have young children, before school age, the cost of daycare is running between $8,000 – $10,000 per year in Canada, and that doesn’t include cooking and cleaning in the home. Dad would still needs to provide meals and clean the house, or he could hire someone to do this for about $15 – $20 per hour. Let’s also assume Dad needs a house cleaner to come over once a week to do the toilets, vacuum carpets, etc.

Let’s look at two costing scenarios – #1 has a live in nanny providing child care and cooking/cleaning services. #2 has daycare for two children plus additional cooking/cleaning services paid for weekly.

#1 – Live in Nanny

Wages for live in caregiver – $1,500 per month

Additional food and utilities for caregiver – $300 per month

Providing a vehicle and gas so Nanny can drive kids around – $450 per month

Total = $2,250 per month or $27,000 per year.

If you needed a live in Nanny for 10 years (youngest child is about 3-4 years old) then the total cost will be $270,000 over the next 10 years.

#2 – Daycare and additional cooking/cleaning services (2 child family)

Daycare costs for 2 children at $700 each per month is $1,400 per month.

Before and After school program is $500 each per month is $1,000 per month.

Assume each child will need 3 more years of fulltime daycare and then 7 years of before and after school. This adds up to $134,400 over next 10 years.

Weekly house cleaner = $100 per week or $400 per month

Additional food costs (eating out and readymade food from grocery store) = $500 per month extra food bill

Babysitting for Dad while he runs errands or has time off = $100 per week or $400 per month

Total for food and cleaning over 10 years = $156,000

Total additional expenses = $290,400

These are not unrealistic numbers for the true cost of replace Mom with paid work. In both scenarios, Dad will be much busier than he has ever been before, but with enough help he might be able to still stay in his full-time job and have a good career.

Consider both Life Insurance and Critical Illness Insurance for Mom

There are two scenarios to consider when protecting Mom with insurance. The first is obvious – Mom dies and the family is left without a caregiver and house worker. What would happen if Mom became critically ill and was effectively disabled? She would need additional medical care which might not be covered by provincial healthcare – meaning more bills for the family, and the costs for the work not being done – as outline above – will still need to be paid for. The only silver lining in the situation with Mom getting seriously ill is that she might recover and go onto having a good, productive life. If such an outcome happened like this, then many of these additional costs are temporary, but still impactful.

Let’s assume Mom is age 30 and has two young children. What would it cost to properly insure her life risks and critical illness risks? Assuming she is a non-smoker in average health for a Canadian, she could get insurance very cheaply using term life and term critical illness coverage. Here are some examples of cost:

Term 20 $250,000 life insurance – $18.27 per month (Manulife)
Term 20 $500,000 life insurance – $26.55 per month (Equitable Life)
Term 10 $150,000 critical illness insurance – $39.15 per month (BMO Insurance)
Term 20 $150,000 critical illness insurance – $51.30 per month (BMO Insurance)

As you can see, you can insure Mom for all risks, for very large amounts of coverage, for well under $100 per month. Even the highest cost option above, Term 20 life and critical illness insurance for $500,000 and $150,000 respectively is only $77.85 per month. Wouldn’t it be worth a small cost now to guarantee your family’s future needs if the worst was to happen, and Mom died or became critically ill? I know it’s important for my family.

Contact Life Guard Insurance to make sure Mom is properly insured

If you have never looked at proper life and critical illness insurance for the stay home Mom in your family, we can help. Contact Life Guard Insurance and we will connect you with a local life insurance broker who can make sure Mom is properly protect and the family’s future is secure.

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about Canadian Moms needing proper insurance would also be very much appreciated.