It’s a natural instinct of any mother to protect their children. While you can’t do that physically after you’ve gone, you can do it financially in the form of life insurance. It can also give financial help to the guardian of your children.
There are numerous ways that life insurance can be a huge help for single mums. And as a single mum myself, there are many questions that you may have like I did. Who will receive the money? Do I need life insurance? What type should I get? These are a few of the questions I will go through with you.
Should you get life insurance?
Everyone’s situation is going to be different and not everyone will feel as though they are going to need life insurance. For example, if you share custody of your child with the father who is in a comfortable financial situation, then you may feel it’s not required. However, everyone needs life insurance! You never know how situations may change with relationships, deaths and many other circumstances.
For many single mums, they don’t have financial help and know that if they were to pass away, the guardian of their child would struggle financially. There are many child-related costs that people have to cope with, such as childcare, along with schooling, food and other day-to-day costs. Life insurance can be a great way to give you peace of mind that they would be looked after if the worst were to happen.
One thing to keep in mind is that getting a single life insurance policy, regardless of your relationship status, is always a good idea. Read Why Everyone Should Have Single Life Insurance Policies to learn why!
Putting life insurance in a trust
If ongoing finances aren’t a concern then there is another great reason to get life insurance and that is to leave something behind for your children. You can write your life insurance into a trust which can payout on your death or on a date of your choice. A popular use of a trust is for it to pay out on your child's 18th birthday.
You are able to stipulate the terms of the trust, who manages it and what powers they have over it. The benefits of a trust are to make sure your child/children have some financial security in their adult life to help with things such as education or a house. To learn more about trusts, James from James Pearson Estate Planners is your guy. He is very knowledgeable and helpful, putting his clients specific needs first.
Types of life insurance
Many people assume that life insurance is simply a large payout once you've passed away but there are more options than that. Here we look at the varying types. Read What is Life Insurance to learn more about your life insurance options!
Whole of life cover – This is where you’ll pay into a life insurance policy for a decided amount of time and your beneficiaries will receive a lump sum upon your death.
Term cover – Term cover is often much cheaper as both the monthly premiums (what you pay) and the payout will either stay the same (level term), reduce (decreasing term) or increase (increasing term) every month.
We currently offer term life insurance, with either level or decreasing as your options.
• Level cover – this means the cover amount does not change over the cover period. It doesn’t keep up with inflation so the cover amount may be worth less in the future.
• Decreasing cover – this means that after the start date the cover amount will reduce each month and will be zero by the end of the term. The amount by which it goes down is the equivalent to an annual interest rate of 8%.
Choosing the right life insurance for single mums
You shouldn't dive headfirst into the world of life insurance without a plan. You want to know exactly what you want cover for. How many children do you have? Do you want to leave money in trust? Perhaps you want to be able to clear the mortgage and make life easier for your child's guardian?
To work out the right cover, you need to assess your situation. It’s very personal, so feel free to get in touch with Bequest, they would be happy to answer any questions you may have, firstname.lastname@example.org
Flexible life insurance for single mums
Your life insurance policy doesn’t have to be set in stone once you sign your policy. While some policies can’t be changed, others can be amended as your circumstances change. This allows you to adjust your policy as and when you need to.
It could be that you have more kids in the future, get married or perhaps take on a mortgage. Bequest allows you to make changes to your life insurance policy as your priorities change.
Does single parent life insurance make sense?
As you've seen here, getting your own single life insurance policy is a great idea. Your priority is always to protect your children and whatever your circumstances, make sure you get the right policy for you.
Author: Anne Howard