Protection When You Are Caring for Elderly Parents

There is a point, usually in your forties or fifties, where you are supporting people in both directions at once.

Children still at home or at university, and a parent who needs more help than they did last year. The help is practical rather than financial at first: shopping, appointments, a few hours a week that quietly become a few days. Often it means reducing your own hours.

That makes this group unusually exposed and unusually under-insured, because the cover they hold was arranged when there was only one set of dependants.

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The short answer

People supporting both children and ageing parents are carrying two sets of dependants on one set of shoulders, often while reducing their own hours to provide care. If they cannot work, two households feel it at once. The cover usually needs to account for the care you provide as well as the income you earn, because somebody would have to be paid to do it.

What this changes

Two households now depend on you in different ways at once
You may have reduced your working hours, which reduces income and pension contributions
The care you provide has a replacement cost if you could not provide it
You may be contributing financially to a parent's care as well as your own household
Your own retirement planning is often paused at the point it should be accelerating
Existing cover was almost certainly sized before any of this started

The bit people miss

Almost nobody insures the care itself. If you are providing twenty hours a week of practical support to a parent and you are suddenly unable to, that care still has to happen, and the alternative is paid help at a market rate or a move into residential care considerably earlier than planned. That cost falls on the family at the same moment your income stops. It is a real and quantifiable exposure and it is virtually never in anybody's sums.

The Care You Give Has A Price If Somebody Else Has To Give It

This is the calculation the sandwich generation almost never does, and it is worth doing once.

Count the hours of practical care you actually provide in a normal week: shopping, cooking, appointments, medication, cleaning, company. Then look at what a care agency charges per hour locally. For a lot of families that comes to a substantial monthly figure, and it is a figure that appears the moment you cannot do it yourself.

That is not an argument for insuring every hour. It is an argument for recognising that your exposure is bigger than your salary, and that a lump sum which could fund a year or two of paid care is doing something a monthly income replacement cannot.

Reduced Hours Reduce More Than Income

Cutting back at work to provide care has a second effect that lands twenty years later.

Lower earnings mean lower pension contributions, and lower contributions during your highest-earning years compound into a materially smaller pension. It also usually means less workplace cover: death in service is typically a multiple of salary, so a drop in hours quietly reduces the protection you already had, at the exact point your responsibilities increased.

That is worth checking rather than assuming. If your employer's cover has shrunk alongside your hours, the gap it leaves is probably bigger than the premium it would cost to fill.

What usually fits, and why

Income protection

The most likely claim, and the one that matters most when two households depend on your earnings and your time.

Critical illness cover

A lump sum can pay for care you would otherwise have provided yourself, which is exactly the cost a monthly benefit does not cover.

Life cover

Sized for children who may still be dependent and for any financial support a parent relies on, rather than for a mortgage that may be nearly gone.

Common questions

Why is the sandwich generation particularly exposed?+

Because two households depend on one person in two different ways at once: financially for children, and practically for a parent. If that person cannot work, both feel it immediately, and the care they were providing still has to happen and has to be paid for. Existing cover was almost always arranged before the second set of responsibilities appeared.

Can I insure the care I provide?+

Not directly, and you can size cover with it in mind. Count the hours of practical care you provide in a normal week and look at what an agency charges locally; for many families that is a substantial monthly figure that appears the moment you cannot do it. A lump sum that could fund a year or two of paid care does something a monthly income benefit does not.

I reduced my hours to care. What should I check?+

Your workplace death in service, because it is typically a multiple of salary and will have shrunk with your hours, usually without anybody mentioning it. Also your pension contributions, since lower earnings during your highest-earning years compound into a materially smaller pension. The protection gap is often larger than the cost of filling it.

Should I be insuring my parent as well?+

That is a different question and usually a harder one, because cover at older ages is more expensive and health conditions are more common. What people in this position more often need is cover on their own life and income, since they are the one holding everything together. We can look at both and tell you honestly what is available.

What should I prioritise?+

Income protection usually, because being unable to work is the likeliest event and it is the one that hits both households at once. Critical illness is worth looking at alongside, specifically because a lump sum can buy the care you would otherwise provide. Life cover should be resized for the people who actually depend on you now rather than for an old mortgage.

Cover that often goes with this

The gaps we most often find sitting next to this one.