Important life insurance considerations for couples

Balance is important in relationships and life. But often the main breadwinner in a couple will have life insurance, while their partner – who might be doing unpaid work like domestic and child rearing duties – isn’t covered. We look at some things you should consider when buying life insurance as a couple.

When it comes to quantifying the fiscal value of people’s contribution to society, economic activity is a limited measure. This is because it only captures paid labour. However, unpaid work contributes greatly to the living standards of all members in a household.

When a couple decides to start a family and their first child is born, a large gap begins to develop between men and women when it comes to unpaid work. There are consequences to this, which is why it’s worth considering life insurance for both partners instead of just the main income earner.

The gender gap in unpaid work for new parents

Typically, unpaid work includes childcare responsibilities, housework, household errands and outdoor tasks. It also includes care provided to other people not living in the household and volunteer work – both of which contribute to the wellbeing of the broader community. According to the 2021 Household, Income and Labour Dynamics in Australia (HILDA) Survey, for most couples, both partners start off spending around 40 hours per week doing paid work and just under 20 hours doing unpaid work. It stays this way until the arrival of their first child which is when a significant gap starts to grow.

Women’s time spent on unpaid work jumps dramatically to around 70 hours per week, with a decline in time spent on paid work. Meanwhile, men’s time on unpaid work also increases, but to a much smaller degree at around 30 hours per week.

Then, after the child’s birth, the total time working unpaid is slightly higher for women than men, and it stays this way for around six years before levelling out again. If a couple has more than one child, however, the gap continues to widen.

This gap has existed for a long time. When you compare the situation in the first decade of this century with the second decade, there’s almost no discernible change in these patterns.

Unpaid childcare is Australia’s largest industry

The monetary value of unpaid work in Australia is simply too large to ignore. A study from PwC estimates that the market replacement value of unpaid work is $565 billion, representing 33.9% of GDP. This means that if the total economy included an estimate of the value of unpaid work, the GDP would be a third bigger than formal measurements.

PwC adds that unpaid childcare in itself is valued at $409 billion. This makes it Australia’s largest industry – bigger than any other sector in the economy. In addition, other primary contributors are domestic work (valued at $132 billion), care of adults ($15 billion) and voluntary work ($8 billion).

It’s clear that women are significantly overrepresented in the unpaid economy, accounting for almost three quarters of all unpaid work. The PwC research shows that women conduct 76% of childcare, 67% of domestic work, 69% of care of adults and 57% of volunteering.

These vital unpaid roles highlight the importance of ensuring that both partners are covered financially for any unforeseen events in the future. It's worth thinking about what would happen if the partner doing the majority of unpaid work received a terminal illness diagnosis or passed away. What kind of support would the family need?

How couples can benefit from getting life insurance together

Getting life insurance together can offer two people the opportunity to cover themselves with a single life insurer and often take advantage of added benefits like a simpler application process for two people or a partner policy discount. Life cover can provide significant peace of mind should you and your partner pass away or receive a terminal illness diagnosis. After a successful claim, your loved ones can use the life insurance benefit payout to help them:

• cover mortgage payments or rent
• maintain the home
• pay off outstanding debts
• pay household bills and day-to-day living expenses
• maintain current lifestyle
• support children
• pay for kids’ current and future education fees, and
• cover funeral expenses.

Couples taking out a joint policy or apply for standalone policies with an insurer at the same time may also benefit from cheaper premiums, policy discounts and the convenience of only managing cover with a single insurer.