Companion Advisor: Insurance
Insure a stay at home parent
In many Canadian families one parent
will opt to stay home to look after the children, usually when the children
are under the age of two or there is more than one child. It's often a
financial trade-off for young couples - whether to spend money on daycare
or struggle along on one income.
This is one of life's transitions
and a good time to get some financial advice from a member of the Canadian
Association of Insurance and Financial Advisors (CAIFA), such as Fiscal
Agents. There are several long-term financial repercussions to consider.
The first concern is whether the
family can survive on one income - some financial advice may help you
change your lifestyle to live within a restricted budget. Remember that
couples with a single income are taxed more heavily than those who split
their income. The parent who quits a job to stay with young children loses
RRSP contribution room for the time that he or she is out of the workforce.
That can be addressed by using spousal RRSP contributions.
What about life insurance?
A parent who leaves a salaried
job with benefits often loses life insurance coverage. So couples
are left with the decision - should we insure a stay-at-home Mom
yearly costs of replacing a stay-at-home parent
(child under age 5)
(once per week)
(if you work shifts)
meals (once per week)
For example, stop and consider the
value of what Mom contributes to your family when she is at home. She
may not be generating an income but she is saving you both of bundle in
daycare costs, housekeeping costs and peace of mind. If she died, it would
cost $30,000 or more each year to hire a nanny or to replace what she
does with daycare and a housekeeper.
A stay-at-home Dad also saves money on shopping around for clothes and
food, Dad's taxi service to hockey and ballet lessons and home-cooked
meals. He provides the opportunity for his working partner to get on with
the job, as someone is there to help with homework or to care for sick
Young families on one income are
often stretched for case but life insurance is not a frill. It may be
possible to carry on a group policy from a former employer or to find
insurance that meets your budget. Sit down with your Fiscal Agents insurance
advisor to try to find a policy that you can afford and let them show
you how a combination of mortgage insurance and term insurance can protect
your family if one of you dies.
This article is
reprinted with permission from the Canadian Association of Insurance and
Financial Advisors (CAIFA), www.caifa.com.
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© , Fiscal Agents Money Management Newsletter
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