The mere thought of leaving your child without a mum is truly unbearable. However, while the emotional void of losing a parent could never be filled, it’s possible to lessen the financial burden.
Securing adequate life insurance means that even after you’re gone, you can still cover all the important milestones in your child’s life.
But only working mums that bring in a tangible salary need life cover right? Wrong, all mums can benefit from having a life insurance policy.
Let me explain…
As a single mum, it’s very possible that you’re the sole breadwinner in the household.
Without life insurance, your passing could leave your children in serious financial difficulty. This could potentially culminate in having to move home and go through a major lifestyle change.
Life cover can help prevent this upheaval by paying off the mortgage, meeting day-to-day living costs or providing a cash lump sum inheritance.
Unfortunately, only 42% of single parents in the UK have a life insurance policy, (source: www.beaglestreet.com).
Getting by on one income can be very challenging and many single mums don’t think they have the funds to pay for such things as life insurance.
But life insurance doesn’t have to be expensive. In fact, if you are young and healthy you can secure cover for as little as 20p-a-day.
Young mums & mums-to-be
Having a baby is often the first major life event that makes us think seriously about our morality.
Did you know that the younger you are, the cheaper your monthly premium will be (due to the reduced risk you present to insurers).
As a result, it’s a good idea to take out a policy as young as possible so you can lock in very cheap monthly premiums.
However, young mums have a million and one things to do, and being proactive and taking out life cover often gets forgotten.
As a working mum, your passing would not only mean a devastating loss for your child, but also a huge financial loss to the home.
The money you bring in each month would be lost, potentially leaving your dependants unable to make the mortgage repayments or meet other living costs.
The average cost of raising a child over 21 years is £231,731 (source: themoneycharity.org.uk).
Taking out life insurance could leave your family with a large cash lump sum to minimise the financial disruption.
It’s important to consider any increase in income you may experience over the policy term as well as the inevitable increase in living costs.
I believe it’s equally important for stay-at-home mums to have suitable life insurance as it is working mums.
It’s a common misconception that stay-at-home mums don’t need life insurance as they don’t bring in an actual salary.
Think about it. As a stay-at-home mum, if you were no longer around your family would suffer enormously both practically and financially.
It’s likely that your partner would have to reduce their working hours or pay for expensive childcare. Who would cover all the other roles; cook, cleaner, taxi service, personal shopper etc?
Taking out joint life insurance is a cheaper option which covers you and your partner. However, these joint policies only pay out once, usually upon the first death.
Write your life insurance policy in trust
As a mum, writing your life insurance policy into trust could really benefit your loved ones financially.
Writing a policy in trust means that it’s excluded from forming part of your legal estate and therefore avoids 40% inheritance tax.
The payout is usually issued much quicker too, as there is no need to wait for probate to be granted.
Another major benefit from a mum’s viewpoint is if you leave your policy to your child but they’re too young to manage the money, you can leave the funds in the control of a designated trustee.
The named trustee will manage the money on behalf of your child until they reach an appropriate age when the sum can be transferred, for example at 18 or 21.
How to secure life insurance?
The thing about life insurance is you don’t know you need it until you need it and it’s very easy to put off arranging for another day.
Why not seize the day and secure the future of your loved ones?
In order to secure the best deal the trick is to compare multiple quotes as premium costs can vary wildly.
You can compare quotes from different insurers yourself online. However, this research can be very time consuming and somewhat frustrating.
Another option is to use a comparison website. The problem here is that these sites don’t usually compare all providers.
The final option is to use an FCA registered broker, like Reassured, who’ll search all the major insurers and find you the best deals.
And the best bit, their service is completely free to use, (they make their money by earning comission from the insurer).