Guide to Life Insurance for Mums
No parent wants to think about passing away, but it’s worth making sure that if the unthinkable were to happen, your children would be loved after. Over 46,000 children under the age of 18 lose a parent each year. If you’re a mum, getting life insurance could be one of the best things you do to protect your family financially if you were no longer there.
Why do mums need life insurance?
Life insurance can provide your family with a financial safety net, whether you’re a new mum, single mum, stay-at-home mum, working mum or the breadwinner. If the unthinkable happens, your life insurance policy will offer financial protection to your loved ones when they need it most.
Here are a few reasons why mums need life insurance:
1. Life insurance could pay off the mortgage
Whether you earn an income or you’re a stay-at-home parent, if you have a mortgage your family will rely on you to keep it paid. If you pass away with a life insurance policy in place, the payout could be used to pay off the mortgage and protect your family home.
Learn more: How to lower your mortgage payments
2. Life insurance could pay the bills
Life insurance can do more than pay off the mortgage. It could be used to cover other living expenses too, from utility bills to council tax.
3. Life insurance could pay for childcare and other support
Many families use life insurance to cover the breadwinner's salary, but stay-at-home parents play a vital role too. If you’re a stay-at-home mum and you’re responsible for the majority of the childcare and household tasks, your absence could have a huge financial impact on the rest of your family. Life insurance could cover the cost of childcare if something was to happen to you.
It could also help to relieve the pressure on your partner or spouse when they need it most. They might use the payout to hire a cleaner, gardener and virtual assistant so that they can continue to earn an income without burning out.
4. Life insurance could help you leave a legacy
A really big life insurance payout could help your children to buy a house, get married or travel the world! The bigger the payout, the higher your premiums will be, so make sure your monthly costs are affordable before committing to a particular policy.
By preparing for the worst and finding the right insurance, you can give yourself peace of mind and make things easier for your children.
What is the best life insurance for Mums?
The best life insurance for you will depend on your personal circumstances and family. It’s worth choosing between level term and decreasing term life insurance, and comparing providers who offer each type.
What is level term life insurance?
This type of policy is set for an agreed period such as 30 years and pays out a fixed fee to your beneficiaries. Your family could use the payout to pay both essential and non-essential expenses for years to come. They could even use it to fund holidays and house deposits.
The more cover you want, the higher your monthly premiums will be. So you’ll need to find a balance between helping your loved ones live a good life when you’re no longer around and what you can comfortably afford to pay now.
What is decreasing term life insurance?
If you have a repayment mortgage, a decreasing term policy may be the best life insurance for you. This type of life insurance is often used to protect the family home, as it’s usually linked to the outstanding mortgage balance. As your mortgage debt decreases over time, so will the payout. This means that if you passed away after 10 years, the payout would be higher than if you passed away after 20.
Decreasing term life insurance can be more affordable than other policy types while still protecting the family home. Keep in mind though, if you want to provide your loved ones with a payout big enough to cover other bills and living costs, you may get better value with a different type of life insurance.
What is whole of life insurance?
Whole of life insurance tends to be more expensive than other types of life cover, since it offers a guaranteed payout no matter when you pass away. As long as you keep up with the monthly payments, your loved ones will receive a fixed payout one day.
What about joint life insurance?
If you want to cover your partner or spouse as well as yourself, a joint life insurance policy may be suitable. It’s usually cheaper than taking out two individual policies, but it’ll only pay out once. Once a payout has been made, the policy will end. If the surviving partner wants their cover to continue, they’d need to take out a new policy.
Learn more: Can I have more than one life insurance policy?
What are the alternatives to life insurance?
Life insurance isn’t the only type of protection designed to take care of your family. Mortgage protection can cover your mortgage costs if you’ve been made redundant or you’re unable to work due to a serious illness or injury. While income protectioncan cover your living expenses if you’re out of work due to an illness or injury. It’s also worth considering critical illness cover. You’ll get a tax-free lump sum following the diagnosis of a serious medical condition.
Get expert insurance advice
Our team of protection and insurance specialists can help you work out the right type of cover for you and your family.
Do single mums need life insurance?
Yes, although it’s not compulsory, it’s a good idea for single mums to get life insurance. If you provide your children’s only source of income or you’re solely responsible for their care, a good life insurance policy can give you peace of mind that if you were to pass away they would be provided for.
Life insurance could cover the cost of your children’s care and living expenses for years to come. A very large payout could even help them learn to drive, go to university, fund a travelling trip or even provide them with a house deposit. So you can still provide for them even after you’re gone.
If you’d like help finding single mum life insurance, our team of protection specialists can help. Get started here.
What is the best life insurance for a single parent?
If you’re a single parent, the best life insurance for you will depend on your personal circumstances. Single parents are often well suited to level term and decreasing term policies. A decreasing term policy is often the most affordable as the payout will get smaller over time since its purpose is to pay off outstanding debts such as a mortgage. If you want your life insurance to provide for your children in other ways, a level term policy may be best for you.
It’s also possible to name your children as your life insurance beneficiaries, but you’ll need to appoint a guardian to manage the money and support your children until they reach 18. You don’t have to grant custody of your children to the same person. Your chosen guardian is simply responsible for looking after your children’s financial needs.
It’s a good idea to get financial advice before taking out life insurance. This is true for any parent, but it’s even more important if you’re a single parent. A financial advisor will help you appoint a guardian in your will and place your life insurance policy in a trust. A trust will separate your life insurance payout from the rest of your estate, protecting it from inheritance tax and from being used to pay off any outstanding debts.
Need help deciding on the cover you need?
At Tembo, our in-house team of award-winning advisers will compare policies from the UK's leading insurance providers to find the right cover for you and your family.
