Why every parent needs a Plan B for their children's future
The effect of the death of a parent on our children's future
Can we measure the future impact of the loss of a parent? While this is different from family to family, what is measurable is the effect of the financial loss during the most difficult time in a child's life.
A report by ING Australia studied the future impact the loss of a parent can have on a family and the role sound financial advice can play in helping families pick up the pieces. Additional research was conducted 5 years later by ANZ with similar results.
Measuring the financial impact on a child's future when they loose a parent
The study found the loss of a parent can have a devastating effect on a family’s lifestyle adding to the already significant impact on the lives and mental well-being of children – with almost a third (32%) of families having to move house within two years as a result of financial pressure,
Summary of the main findings:
The future impact on a child of the loss of a parent
- Of all children surveyed, almost half (48%) said their academic performance worsened after their parent died
- Just over half (51%) were diagnosed with clinical depression
- Looking specifically at those children who were forced to change schools due to financial pressure, over three-quarters (78%) experienced a decline in academic performance
- Over 69% of these were later diagnosed with clinical depression.
This shows just how hard it can be for children to cope with the loss of a parent – especially if they have the added upheaval of moving away from their home, school, and possibly even their friendship group.
It also highlights the vital role life insurance can play in helping a family pick up the pieces.
With the right level of life insurance cover, parents are better able to provide the ongoing financial support a family needs in the event of sickness or injury. That could include paying off the mortgage, staying on top of household bills, and paying long-term education costs – giving children the best chance of getting on with their lives.
Key findings included
Some of the reports key findings
- 63% of respondents had less than a week’s warning prior to a parent’s death.
- 64% of deaths were the family’s main or equal financial provider.
- 32% of families moved house as a result of financial pressure within the two years after the loss.
- 48% of those who were children experienced worsened academic performance (78% of those who changed schools).
- 1 in 2 children who lost a parent suffered from clinical depression. This increased to 69% when children had to change schools due to financial pressure.
- 78% of those who did not have insurance agreed that in hindsight it would have helped if their parent/partner had had life insurance.
Important: If you have professional insurance in place specifically for this eventuality, make sure to review it annually.
If you don’t have insurance in place or you're not sure what you're really covered for, consider carefully the impact that sickness, injury or even unexpected death, would have on your family, your business and those that rely upon you.
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Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
