Insuring unpaid care

What would actually have to be paid for

• Childcare, at market rates, across the hours currently covered
• In-home care or a facility, where an adult is being cared for
• Transport to appointments, school and activities
• Household management — cooking, cleaning, laundry, administration
• Care coordination, which for a complex condition is a job in itself
• The surviving partner's reduced earnings, if they'd have to cut hours

The two-sided cost

It isn't only the services bought in. A surviving partner often has to reduce hours or change jobs to cover what the caregiver was doing, so income falls at the same moment costs rise.

Sizing coverage on services alone misses half of it.

Sizing it

Price the hours. Take what the caregiver does in a week, cost it at local market rates for each service, annualise it, and multiply by the years the care would still be needed.

Then add any reduction in the surviving partner's earnings. That total is the honest number, and it's usually far larger than people expect.

Underwriting a non-earner

Insurers apply financial underwriting to justify coverage amounts, which for someone without income can mean questions. The answer is the economic value of the care, and it's a recognised basis.

Insurers also commonly look at the working spouse's coverage as a reference point. A household where the earner is well covered and the caregiver isn't is a common and correctable imbalance.

The case worth flagging

Where the person being cared for is disabled and receives means-tested benefits, do not name them directly as beneficiary. A death benefit paid to them can disrupt eligibility for benefits worth more than the payout.

That situation needs a properly drafted special needs trust and an attorney who does this work.