Income protection for a non-working partner – is it possible?
The need for income protection cover became even more apparent during the Coronavirus pandemic. The furlough scheme brought to the fore the importance of maintaining an income. When advisers talk of protecting income they naturally gravitate to the income of the bread-winner, which makes sense.
When those families involve children though, it’s often true to say that the breadwinner can only go out to work to bring in an income because there is a non-working partner to care for the children. On top of this, there is the running of the home. It can be just as important to have protection in place for a “non-working” partner. Who keeps the family and household running. In an article by Protection Guru, they take a look at what providers offer in terms of cover, should this vital member of the household be out of action. It is to this that this feature refers.
Clients are asking their advisers more frequently, what would happen should their non-working partner become ill or injured? Restricting the worker of the family’s ability to do their job?
Taking into account the cost of replacing a cleaner, taxi driver, nanny, shopper, gardener or babysitter. The amount that a houseperson or non-working partner is insured for is important to work out financially.
Legal and General worked out in 2015 that the unpaid work of a houseperson was £29,535 per annum. (Value of a parent flyer)
One insurer keen to keep up with real-life expenses, offers an extra £100 per month per child that is dependent on the client. Up to an additional extra of £300 per month or 20% of the total benefit. This is not offered by any other provider.
The need to discuss this vital insurance with an expert is imperative to get the most suitable cover.
When should the cover payout?
The main income earner needs to consider savings and their employer’s sick pay policy to answer this question. Whereas for a houseperson, savings and benefit income are the main factors that will determine the best length of deferred period. This is the period of time between when you fall ill and when you need the payment to begin.
What would happen should the main income earner became a houseperson during the life of their income protection contract?
Protection Guru researched and found that all insurers allow clients to continue their income protection cover if they become a houseperson during the life of their contract. Especially with more families taking it in turns to take on the role of main caregiver for children, pets and the home.
However, existing cover levels may be restricted to a maximum monthly benefit (usually £1,500 per month). Often their occupation status would be reduced to either a homemaker or activities of daily living definition of incapacity. This is described in more detail in The varying occupation covers explained.
The Coronavirus pandemic has highlighted just how much a large portion of the population rely on support from family and friends. Especially, when it comes to childcare and help around the home. These traditional avenues were cut off by pandemic-related restrictions and lockdowns. Income protection for those who are ‘Housepersons’ is more important than ever.
Source: Protection Guru November 2020
Whilst you are welcome to get a quote online, we would recommend you speak to one of our advisers.
Any quote that your adviser provides you with will take into account your circumstances, medical history, as well as your budget!
An online quote is just that – a quote – it isn’t a definite offer of cover. What really matters is the premium you are offered, after your application has been assessed.
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