Life insurance cover for UK mums
Life as a mum is full of uncertainty; however, you can secure the financial future of your family whatever the future may hold, with life insurance for mums.
The thought of leaving your children without a mother is unbearable.
Whilst the emotional void of losing a mum can never be filled, it’s at least possible to lessen the financial burden.
As a mum, putting in place adequate life insurance means even after you’re gone, you can still protect all the important milestones in your children’s lives.
At Reassured we can find you the cheapest and most suitable life insurance policy available. (And the best bit is, our broker service is FREE).
However, in 2019 there are many different types of mums requiring protection…
Life insurance for single mums
As a single mum, it’s possible that you’re the sole breadwinner and potentially the only financial support your children receive.
For this reason, without life insurance, your passing could leave your children in serious financial difficulty, potentially having to move and endure major lifestyle changes.
Life insurance can help prevent this upheaval by clearing your mortgage, providing a steady income for day-to-day living costs or a cash lump sum inheritance.
Despite this, only 42% of single parents have life insurance. But why?
Getting by on a single salary can be very challenging. What’s more, only 38% of single parents receive maintenance payments.
As a result, many single mums don’t think they have the monthly disposable income to afford such luxuries as life insurance.
But life insurance doesn’t have to be expensive.
Using an FCA registered broker, like Reassured, to compare quotes means you can find the most suitable policy to suit your budget.
Life insurance for young mums
Having a child is often the first major life event that makes you seriously question your own mortality, particularly for young mums.
As previously stated, taking out a life insurance policy can provide financial security for your child if you’re no longer around.
But did you know, the younger and healthier you are, the cheaper your monthly premium (due to the reduced risk you pose to the insurer).
As a result, it’s best to take out life insurance as early as possible so you can lock in very low (cheap) premiums.
Did you know a 25-year-old can secure comprehensive life insurance for as little as £6 per month.
Life insurance for working mums
As a working mum, your death would not only mean the devastating loss of a parent, but also a financial loss to your household.
Your income would be lost, potentially leaving your family unable to pay the mortgage and other household bills/family living costs.
Securing life insurance could leave your family with a cash lump sum pay out to minimise the financial disruption.
When arranging life insurance, you should consider the income you contribute as well as what’s needed to cover your family’s lifestyle.
It’s important to consider any increase in income you may experience over the policy term as well as the increase in daily living costs.
Life insurance for stay-at-home mums
We believe it’s equally important for stay-at-home parents to have suitable life insurance cover in place.
It’s a common misconception that stay-at-home mums (or dads) don’t require life insurance as they don’t bring in a tangible income.
However, as a stay-at-home mum, if you were to pass away your family would suffer massively, both practically and financially.
It’s likely that your partner would have to reduce their working hours or alternatively pay for expensive childcare. Who would cover all the other roles you fulfil?
Taking out joint life insurance is a cost-effective option which covers you and your partner. However, these policies only pay out once, usually on the first death.
See our blog post the true value of a stay-at-home parent (estimated to be £80,000 a year) and the importance of life insurance »
Life insurance for mums-to-be
There are many things to consider when you’re pregnant, and the future of your child is usually a top priority.
Welcoming a child into the world makes you more aware of the dangers which exist both for you and them.
And whilst not pleasant to consider, your death could lead to emotional and financial instability if the right provisions aren’t in place.
Taking out life insurance during your pregnancy ticks off another task before the big day arrives (and the chaos of parenthood commences).
Generally, taking out a policy whilst pregnant is no different to obtaining life insurance as a parent.
You determine what it is you’re looking to protect, how long you want cover and once all the required information is provided, your premiums are calculated.
Occasionally, an insurer may ask to postpone your cover if there have been complications during the pregnancy. However, as long as the pregnancy is progressing well, the cover can start immediately.
When applying for a policy, you’ll be asked your weight. Whilst pregnant, the insurer will take into account your pre-pregnancy weight as opposed to your current weight.
In the instance of a planned C section, your life insurance application will be postponed until after your major operation.
Mums that smoke
As I am sure you’re aware, if you smoke your life insurance premiums will be more expensive.
This is because of the associated health risks, which means statistically a claim is more likely. Insurers mitigate this risk by hiking premiums.
Therefore, if you’re a mum who smokes it’s even more important that you compare multiple quotes.
This is because different insurers employ different underwriting processes and therefore costs can vary.
However, rest assured that undergoing this process still means it’s possible to obtain affordable life cover.
Having more children
There are a number of specified instances where your life insurance can be changed without the need for additional underwriting.
A special event option encompasses events such as having more children or buying a larger house.
The sum assured can be increased to account for the larger amount of protection required. This increase will, however, be reflected in your monthly premiums.
If you want to have more children, remember to consider your life insurance and whether you have enough cover in place to meet your changing circumstances.
Life insurance for women
Due to EU gender neutral ruling, women no longer pay less for life insurance.
It’s a relatively well-known fact that the life expectancy of women in the UK is higher than that of men.
As a result, traditionally women would pay lower monthly premiums than men for the same level of life insurance cover.
However, on 21st December 2012, the EU gender ruling was put in place to stop men and women paying different premiums for the same level of cover, based on gender.
Despite the UK leaving the EU, the gender-neutral ruling is expected to remain in place, meaning that gender will still not be taken into account.
Write your life insurance in trust
If you’re a mum, writing your life insurance in trust could be a very good idea and really benefit your dependants.
The key benefits of writing your life insurance into trust:
- Avoid or minimise 40% inheritance tax, (over the £325,000 threshold)
- Avoid the lengthy probate process, (for a quicker pay out)
- More control over who gets the money and when, (for example you may only want your children to receive the benefit after they turn 18).
At Reassured, we offer a free trust service to help with the lengthy application process. We’re also on hand to answer any questions you may have.
Critical illness and terminal illness cover
Statistically, you’re far more likely to fall critically ill during your working lives than to die.
Critical and terminal illness cover can provide additional protection if this were to happen.
The majority of life insurance policies now contain a terminal illness element as standard.
This means if you’re diagnosed with an illness covered by your policy and are given less than 12 months to live, you’re eligible for an early pay out.
These funds could be used to fund expensive medical treatments, carry out necessary home adaptations or simply to enjoy your last days with your loved ones.
Critical illness cover, on the other hand, is often sold as a standalone product, (although in some instances is included in your life insurance).
Again this pays out if you’re diagnosed with an illness covered by the policy, although it does not have to be terminal.
This includes cancer, heart attacks and stroke. (If you make a full recovery, repayment of the lump sum is not required).
Policy types for mums
The type of life insurance policy you choose will depend on what it is you wish to protect/provide for your children.
There are a number of different options you can take out. Those most common among mums with young children include:
Both decreasing term and level term life insurance provide your family with a lump sum pay out if you pass during the policy term.
The difference between these policy types is that whilst the value of a level term policy remains fixed throughout, the pay out sum of a decreasing term policy reduces over time.
For this reason, decreasing term is ideal for covering a repayment mortgage which reduces over time.
Level term, on the other hand, is well suited to covering an interest-only mortgage, or a repayment mortgage as well as meeting future living costs or providing an inheritance.
Rather than providing a one-off lump sum, family income benefit provides ongoing monthly payments of a predetermined amount.
Not only does this reduce the need for making difficult investment decisions, but it can also cover day-to-day living costs.
If you’re looking to provide more than one level of cover for your family, it’s possible to take out multiple life insurance policy types simultaneous.
Free life insurance for mums
Nowadays many insurers are offering free life insurance for mums during the first year of their child’s life.
Whilst on the surface this may seem like a good deal, the sum assured rarely exceeds £10,000.
It’s highly unlikely this cover amount would be sufficient in the event of your passing.
To put this into perspective, the average cost a funeral is currently £4,271, leaving very little to support your family with other outgoings such as a mortgage/rent, childcare and living costs.
As a result, it’s generally best to arrange standard life insurance for the true amount required to support your family if the worst were to happen.
How much life insurance do you need?
The amount of life insurance you take out will depend on what it is you’re looking to protect, your outstanding debts and your family’s current lifestyle.
Once you have determined which type of policy best suits your needs, you’ll then need to determine how much cover you need.
In some instances this will be obvious, for example, if taking out a decreasing term policy to cover your mortgage, you would take out the same level of cover to match your remaining mortgage balance.
However, if looking to cover future family living costs, you would need to take into account all your outgoings as well as any new expenses which may occur as a result of your death.
Existing costs could include:
- Monthly mortgage or rent payments
- Day-to-day living expenses (food, clothing, leisure activities)
- Household bills (gas, electricity, water, council tax).
New costs as a result of your death could include:
- Funeral and legal costs
- Loss of household income due to reduced working hours
- Additional childcare.
When determining the amount of life insurance cover you need, you should also take into account the effect of inflation on the pay out amount.
Particularly if your children are young, what may suffice as enough to continue their lifestyle today may not be sufficient in the future as living costs rise.
How long do you need life insurance cover?
As a mum, the length of your policy is usually determined by two factors:
- The age of your children
- The length of your mortgage term.
If taking out decreasing term life insurance to cover your mortgage, you would normally choose a policy term to mirror that of your mortgage.
This would ensure that if you were to die before your mortgage was cleared, your family would be able to remain in their home without the worry of not being able to afford the repayments.
Alternatively, you may choose to use the age of your children to decide the length of your policy.
When looking to secure the financial stability of your kids, your policy could align with the length of time until they’re financially independent.
It’s also important to consider whether your children are likely to attend college and/or university, therefore increasing the age at which they’ll reach financial independence.
Life insurance for mums in summary:
- Life insurance helps secure the financial future of your children
- Cover can enable children to remain in their home and maintain their lifestyle
- The policy which best meets your needs depends on what you’re looking to protect and your budget
- Decreasing and level term policies pay out a lump sum
- Family income benefit provides a set monthly income
- The younger you are, the cheaper the monthly premiums
- Stay-at-home parents generally need life insurance too
- Your policy can be adapted using a special event option if you have more children
- Due to EU gender neutral ruling, women no longer pay lower premiums
- Writing your policy in trust helps reduce inheritance tax and speed up the pay out
- Terminal and critical illness cover can help provide additional protection.