Basics: houseperson benefit
MONEY MARKET - 1ST APRIL 2007
If you stay at home doing the washing, shopping and looking after the children you probably don’t get paid for doing these jobs, but what would happen if you couldn’t do them anymore?
Employed people can choose to have income protection insurance to make sure they would be able to pay their bills should they become unemployed or incapacitated, for example.
But there is also a little known insurance product, called houseperson benefit, which could be suitable for those who are not in full-time employment. The insurance pays you a regular tax-free income to cover the cost of childcare, invalid care or household help if you suffer illness or accidental injury during the cover term.
“Houseperson’s benefit is a valuable benefit for people who aren’t in employment, but do look after dependents,” says Mark Jones, protection manager at Friends Provident. “Many people insure the working partner’s income, but often underestimate how much it costs to pay somebody to look after children or do the housework when it’s something that’s normally done for ‘free’ by the non-working spouse.”
Premiums for houseperson benefit vary according to individual circumstances. But a non-smoker woman, aged 35, would pay £41.40 per month for a Friends Provident policy that would pay £300 per week (£15,600 per year), while a man of the same age would pay £24.90 for the same level of cover.
“Unknown to many people, several long-term income protection policies include housepersons’ benefit cover, should the person suffer an accident or disability preventing them from carrying out domestic tasks,” says Richard Mason, managing director of Moneysupermarket.com.
He adds: “To qualify for this benefit, which can be up to £25,000 per year with Bright Grey, the person in question must meet three of six acknowledged criteria, for example, being unable to clean the house, do the shopping or take the children to school.
“This is a benefit that is not heavily marketed so it is well worth checking the small print when you take out one of these policies to see what kind of cover you could be eligible for. The pay out could prove an essential source of income in the case of a married couple who are depending on one salary.”
