A Rough Guide to Life Insurance For Mums

By Vicki Coleman

Being a mum can be tough and knowing where to turn to for information can be tricky, that's why we've put together this short guide on life insurance for Mums.

Why Mums should consider life insurance?

We know you can't fully prepare for losing a parent and no amount of money can take away that loss. However, ensuring financials are taken care of for your children means you are still able to protect the important milestones in your children's lives, even if you’re not around.

By having a life insurance policy in place, you can have peace of mind when it comes to the financial support of your child or children after you pass.

Whether you’re a stay-at-home mum, work part time or full time, we understand that no amount of money can compensate for the loss of a mother but having a policy in place, you could at least help relieve the financial burden your loved ones might face without you.

The financial support can be a way of being there in the unfortunate event that you’re not there.

You can read more about single vs joint life insurance here.

What life insurance is best for a Mum?

Like any life insurance policy, what type you need will depend on your circumstances. Mum's can use life insurance as a financial safety net should they pass away and a lump sum pay-out could help to ensure for example, that an existing mortgage could be paid off.

Making sure your mortgage is paid for can help your family if you were no longer around. They could remain in their family home without having to worry about covering the cost or selling the house.

Decreasing term cover is often used for protecting a repayment mortgage. This is because the amount of cover that you take out initially, reduces over the term of the policy and can be aligned to the amount you have borrowed and the term of your mortgage.

Read more about level term vs decreasing life insurance.

Level and increasing term life insurance usually have higher cash pay-outs depending on your age which can be used to whatever the beneficiaries choose. For example, the money could cover child care costs, school fees or saved for when they reach an important milestone.

If you're not sure if life insurance is for you, we've also covered the top 3 alternatives to life insurance.

How much life insurance do mums need?

The simple answer would be ‘as much as possible’ but we understand that life insurance can be a complex product and will depend on individuals circumstances.

So, again, there is no right or wrong answer to this question. The level of cover you choose will depend on what it is you are looking to protect and what's affordable for you. You’ll need to strike a balance between premium prices you’re able to afford each month and the potential pay-out.

For example, if you want to make sure you don't leave behind any outstanding debt for your family, you may want to consider a level of cover that matches this amount. Similarly, if you want to ensure your mortgage and home are secure for your family and paid off, then you might want to consider a cover amount in line with your mortgage amount.

Some mums will use life insurance to try and make sure that their family have their living costs covered too. It can be tricky to work out an exact figure, but you could think about family living costs such as:

  • rental payments
  • household bills
  • day-to-day expenses like food or school bills
  • any debt you may hold, especially if this is co-signed by someone who may survive you such as a spouse

Often, working mothers are advised to take out a life insurance policy that will pay-out at least 10 times their annual salary, whilst stay-at-home mums should consider the cost of the childcare that would allow the surviving parent or guardian to continue to work.

How long does a Mum's Life insurance need to be?

Working out how long your policy should last for is entirely up to you. To ensure you are covered for what you aim for, think about what scenario you are trying to protect against. For example, do you want to cover yourself until your children have finished their full time education? Or maybe you're looking to put provisions in place, so that if you were to pass away, then your children can remain in the family home or be looked after until they are able to become financially independent may also be a driving factor.

Depending on the type of policy you take out, this can be for a fixed term or whole of life is also another option. With the many products available, if you're unsure which is right for you, then we can get you in touch with an industry professional to discuss your individual circumstances so you can get the right policy for you.

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