Caregiving costs are underrepresented in coverage, but advisors can start to change that
Caregiving may be one of the core reasons why so many women find broken rungs on their career ladders. Children and aging parents often require care at exactly the time when someone is at the middle stage of their career, heading towards management. The response, by many families, is for a woman to take time away from her career to take care of those children or aging parents. The Canadian Centre for Caregiving Excellence estimates that Canadians spend 5.7 billion hours each year providing care without any financial compensation. Unpaid household work was estimated to be worth $860.2 billion in 2019, roughly 37 per cent of Canadian nominal GDP. That time spent caregiving, especially when it comes at the cost of paid work, can have huge long-term ramifications for careers and wealth building.
Andrea Frossard argues that insurance can help offset some of the opportunity costs inherent in caregiving. Frossard is Chief Commercial Officer at Foresters Financial. She knows the experience of caregiving firsthand, having taken an eight year leave of absence to help care for an aging parent alongside her four children. She believes that planning for caregivers begins by making sure the value of what they provide is covered by insurance.
“Among those caregivers who do have insurance, they often don’t think about what would happen from a caregiving perspective if they were disabled or passed away,” Frossard says. “Because they’re giving up a lot of time, and it can be a significant cost. Would another family member take over, or do I need to ensure that I have enough life insurance coverage so my family can pay for someone to do what I had been doing for free. That’s the big miss in many cases when people are thinking about insurance.”
Frossard’s view is that the immense value of the labour of caregiving, while unpaid, should be incorporated into insurance plans. That applies to those people taking leaves of absence to give care, and those who still have their careers while caregiving for loved ones.
Insurance could also be a useful tool to help compensate caregivers within a family. Frossard notes that no specific products exist to cover extended leaves for caregiving, but certain participating whole life or universal life products with an investment component could help offset the opportunity costs of caregiving. The cash value in those products can be accessed to help cover any financial losses incurred during a career leave to provide care. In the case of elderly parents receiving care from their children, they could either use beneficiary designations or that same mechanism of accessing cash value to help compensate their caregiving child.
Women bearing the burden
The work of caregiving in Canada is disproportionately borne by women. A far higher per centage of women (24.4 per cent) are employed part-time in Canada than men (13 per cent). When interviewed by Statistics Canada, women often cite caregiving needs as a reason they chose part time work. When women are providing care to both parents and children, they are far more likely to give up career opportunities. Leaves of absence, the choice to take part time work, and other caregiving-related decisions that women make are often cited as reasons why women face a wage and wealth gap with male counterparts, as well as why they may retire with fewer savings and more limited pension access.
For all the ways she sees women bearing the costs of caregiving, Frossard believes that the wealth management and insurance industries can help. For advisors, she says the first step is to start the conversation with clients about their caregiving expectations and the costs associated with them. That could begin by simply asking them about the kind of caregiving work they already do. Life insurance conversations are key to that discussion, even if they can be difficult, but by introducing the idea of coverage for unpaid domestic labour, advisors can provoke more thoughtful planning decisions on the part of their clients.
Advisors can also work to educate themselves about how life insurance products can help their clients, Frossard says, and work with insurers and carriers to help the coverage available to Canadians better match the shape of our changing society and all the kinds of work it contains.
“You don't have sort of that traditional life cycle anymore, the way maybe it was 50 years ago. So that alone, I think, is an interesting change in the market as far as carriers thinking about flexibility, more thinking about how can you use benefits in different ways more easily,” Frossard says. “We’re building more flexibility into our products in general. That has definitely been the trend, and I expect to be the trend going forward.”
