Income protection, critical illness cover, income benefit and life insurance are all designed to replace an income just in case the unthinkable happens – and on Mother's Day, now is as good a time as any to find out just how much your mum is worth, and protect her contribution to the family.

Johanna King looks at the differences between the varying types of financial protection cover available and why families should make sure they are insured.

A mother's worth

Research by Legal & General found that the cost of replacing the work mothers do in the home is £32,812 per year – an amount above the average UK annual salary and a large sum to replace if she was no longer able to care for the family or contribute to the household income.

Matt Morris, LifeSearch senior policy adviser, says: "The value that mothers provide to the home through daily activities is massively underestimated."

Women on average spend 74 hours a week on household chores and childcare, compared to 53 hours for men.

Full-time mothers put in about 82 a week, making them worth the most to replace, at £36,036. Mums that work full-time still put in a hefty 55 hours a week and are worth £24,492 - plus the income they bring in.

Alan Ferguson, protection marketing and channel development director for Legal & General, says: "Mums are a rock for many families, making sure that the home runs smoothly, that the children are looked after and often holding down a job of their own.

"Families need to ask themselves how they would cope with all the domestic work and childcare that Mum does if she wasn't around?"

Despite the high cost of raising children and the amount contributed by mothers to the home, just 53 per cent of mums have life insurance, 26 per cent have critical illness cover, 20 per cent have income protection and 17 per cent have family income benefit.

Mr Morris says: "Crucially, don't wait till something happens before you look into protecting your finances. By then it may not be possible to be accepted by an insurer and the effects on family finances can be devastating.

"Unfortunately very few consumers actually realise the choices that are available to them and many either buy the wrong product or get a bad deal."

Families have several choices on products they can buy to protect themselves in case something would happen to either parent.

Justin Harper, head of marketing strategy at LV=, says: "Buying cover to protect your income is not as expensive, nor as difficult, as many people think."

Family Income Benefit (FIB)

FIB works the in same way as a life policy, but pays out a regular income rather than a lump sum. Potentially it can even pay out more than double the amount of a lump sum.

The policy is taken out for a certain amount of years, and benefits are paid from the time of death of the policy holder until the policy expires.

For example, if a FIB policy is taken out for 20 years and a claim made after 16 years, benefits will be paid for the remaining four years.

The cost of FIB can be as low as £5 a month. It is suggested that this type of policy is taken out along side mortgage protection (or something similar) to make sure there is enough money to cover all financial obligations.

Mr Ferguson agrees that, especially in a recession, families should evaluate all types of insurance to ensure they are covered in a worse case scenario situation.

"Given the economic backdrop, now could be a good time to consider how to protect your family against financial hardship," he says.

Income Protection (IP)

This is the product many insurers think should be top of most people's financial protection list. Rather than paying out on death, it replaces your salary if you suffer an illness or disability that prevents you from working.

Some employers even provide this type cover as part of your overall employment package - so make sure to check.

The policy pays a monthly tax-free income until you recover - right up to retirement if necessary. The payout level on IP can be flat or set to rise with inflation.

The maximum cover you can have under an IP policy is typically half of your gross income, but the payment is tax-free.

Mr Harper says: "Anyone who has been through the trauma of losing their income through illness, an accident or redundancy and without any type of protection cover in place, would be the first to recommend some kind of cover to protect their income.

"For a modest monthly outlay people can protect what matters most against the financial effects of long term sickness, accident or unemployment, so they will not be left short if the worst happened."

IP is often available for housewives who are either not employed or who work less 16 hours per week.

Life insurance and critical illness protection

Life insurance, in all its various forms, provides a lump-sum payout upon the policy holders death to assist with any costs the may arise.

Critical illness insurance will pay you a tax free lump sum on diagnosis of any one of a wide range of specified illnesses including certain types of cancer, heart attack, stroke, brain tumour.
Unlike other types of cover, life insurance won't pay out unless you die or are diagnosed with an illness which will be terminal within 12 months.

Mr Ferguson says: "Life insurance and critical illness cover can help provide peace of mind that a family could maintain its living standards if Mum wasn't around."

Three things to remember

1. Do not buy a joint policy.
Most people in a relationship make the mistake of assuming that they should be looking at a joint policy.

Although two single life policies cost five to ten per cent more, they pay out twice. A joint policy will only ever pay out once. Also if the couple splits up, they can each take their own policy with them.

2. It is not just working women who should think about finance protection.
Considering how much it would cost to replace the work a mother does inside then home, it might make sense to get cover for a stay-at-home mother, too.

3. Do not rely on state benefits.
"People shouldn't assume that extended family or the State will fill the gap," Mr Ferguson says.

A woman earning £35,000 would get £242 per month from the state. The average family, however, spends £132 a week on the children, meaning more than double the state benefit would be needed per month simply for childcare.

By spending about £29 month on IP, however, a mother could guarantee herself a monthly income of £1500, potentially until she reaches retirement age.