
As a mum, you wear many hats: caregiver, counsellor, teacher, and provider. While you work tirelessly to look after your family, you should also think about how they would be supported if anything were to happen to you.
At one point in time, life insurance was seen as something for the breadwinner of the house (typically dads and husbands), but no longer! For today’s modern families, mums have just as much responsibility in providing for their households and raising a family.
Let’s explore some reasons why you need life insurance as a mother and how it can benefit your loved ones.
How does life insurance work?
It may sound complex at first thought, but the concept of life insurance is quite straightforward. Essentially, life insurance is a contract between you and the insurer, where you pay regular premiums in exchange for a sum of money that will be paid out to your beneficiaries (partner, spouse, children, etc.) upon your death.
Before you take out cover, you will choose the policy type, length, and cover amount. As long as you continue to pay your premiums, the policy will remain in place for however long as agreed. Then, if you die, a payout will be issued following a successful claim.
Why do mums need life insurance?
Whether you’re a single mum, stay at-home parent or expecting, there are plenty of reasons to get covered.
For starters, life insurance provides a safety net for your family in the event of an untimely death. It ensures that your loved ones can cover daily expenses, mortgage payments, and debts without financial strain. If you and your spouse/partner share these responsibilities, your death could leave them in a precarious financial situation.
There are also your children to think about. Without your income, your spouse/partner may struggle to cover childcare costs, education expenses, and other essential needs. Or, if you’re a single mum, your children may be left in the care of a guardian who may not have the financial resources to provide for them adequately.
Another aspect is your funeral costs – these can be expensive and will often fall to your family if you are without a funeral plan. Hiring a Sydney funeral celebrant, booking a venue, and purchasing flower arrangement are just some of the various elements of a funeral ceremony — each with their own associated costs.
This can put an unnecessary financial burden on them during an already difficult time. Life insurance can help cover these costs, ensuring that your family is not left with the added stress of unexpected expenses while they are grieving.
In any of these scenarios, having life insurance cover could help bridge that gap, providing your family with the funds to cover everything from daily living costs to your end-of-life expenses. But most of all, you won’t have to worry about any ‘what ifs’!
What type of life insurance will I need?
Thankfully, with life insurance, you’re spoiled for choice on the types of policies available to you. This includes:
Whole life insurance
If you’re looking for long-term protection, you can’t go wrong with whole of life cover. It pays out a cash lump sum regardless of when you die, whether that’s in 10 years or 50. All you need to do is continue paying your monthly or annual premium to ensure the policy remains active.
Your premiums and cover amount will remain fixed no matter how long you hold the policy, making it a stable option for planning your family’s financial future. Despite such positives, whole life insurance tends to be more expensive than other types of cover as a payout is essentially guaranteed.
This type of policy can be handy for mums who want outright financial security for their loved ones, regardless of changes in the future.
Term life insurance
For mums wishing to be covered for a certain timeframe, term life insurance offers a more affordable option. This type of policy provides coverage for a specified period, typically ranging up to 50 years. If you pass away during the term, your loved ones will receive the agreed-upon death benefit. However, if you outlive the term, there is no payout, and you’ll need to decide whether to renew or purchase a new policy.
There are 3 types of term cover:
- Level – where the premium and cover value remain fixed
- Decreasing – where the policy is used to cover a mortgage or large debt. As repayments are made, the payout value decreases.
- Increasing – where the payout value increases overtime to combat inflation. The premiums may also rise alongside this.
Term life insurance can be particularly appealing to those who have young children or specific financial obligations, such as a mortgage. It’s handy if you want to ensure that your children are covered until they are financially independent or until debts are paid off.
Joint life insurance
Purchased as either whole or term policy, joint life cover protects two people, under one policy. In which case, if you share financial responsibilities with a partner or spouse, it may make sense for both of you to have cover. If you have children it may mean that your spouse receives the money to ensure they are cared for in your absence.
This type of policy pays out a death benefit after the first death in the couple, or after both parties have died. It can also be a cheaper option for couples as it often comes at a lower premium than purchasing two separate policies.
So if you’re a mother considering life insurance, it’s essential to evaluate your needs and the financial responsibilities. Understanding the different types of policies available can help you make an informed decision that provides peace of mind for both you and your family.
As a mother, it’s only second nature to worry about your family’s well-being, especially in the event of an unexpected loss. Take the time to explore your options and consider what type of life insurance could benefit you and your loved ones.