Mums bear a disproportionate burden when it comes to raising children and often have difficulty monetizing their work in order to secure adequate life insurance coverage. This leaves families dangerously exposed if something happens to them.
By getting life insurance for mums, they can ensure that their families’ future is taken care of and can move on with peace of mind knowing that they are not alone in this journey.
In this guide, we explore some of the key considerations every mum needs to make when shopping for life insurance plans. Let’s dive in!
In This Article
1. Evaluate your financial situation
The first step to deciding how much life insurance coverage you need is to assess your financial situation. Think about how much debt you currently have, your monthly expenses such as rent or mortgage payments, childcare costs, and other family expenses.
You’ll also want to consider any future goals or plans you have such as college tuition for your children, long-term care needs, or retirement.
Ask yourself questions such as: What income would your family need if you weren’t around? What debts need to be paid off? Are there any educational needs or other expenses that would need to be covered?
Next, you’ll need to calculate your income replacement needs. This is the amount of money your family would need to maintain their current lifestyle if you were to pass away.
Consider how much your family would need in order to pay off any debts, cover monthly expenses, and maintain their current lifestyle.
2. Research different life plans available to you
Once you’ve established the amount of coverage you need, you can then research different life insurance policies. Compare features such as the amount of coverage, the premium, the term length, and any additional benefits.
Additionally, consider any additional riders that may be beneficial. Riders are additional coverage that can be added to your life insurance policy and can include coverage for disability, terminal illness, and accidental death.
3. Be aware of extra charges attached to policies
Some life insurance policies may come with extra charges attached, so it’s worth checking the fine print. Here are three to lookout for:
This is a charge levied on some life insurance policies by the lending institution that financed your home. It’s usually around 1 percentage point of the cover value of the policy and affects predominantly new policies issued by banks and building societies.
Early surrender charge (ESC)
This is a fee charged if you surrender your policy before its term has expired. It can vary from company to company, but it’s generally around 2 percent of the value of the policy.
Annual administration charge (AAC)
The AAC covers the cost associated with processing all claims made under the policy, including claims assessment and payment processing costs.
4. Seek advice from an independent financial adviser
Independent financial advisers can provide objective advice on life insurance. They can help you understand your options and help you to decide which policy is best for you.
They also offer ongoing advice and support in the event of a claim or in the event that you need to change your policy.
5. Look at the financial strength of the insurer
A company with a poor history of paying out claims or with weak finances could leave you financially vulnerable if something happened to you.
In order to pay claims and keep policyholders fully protected, insurers require a certain amount of money set aside in case of unexpected expenses, such as death benefits paid out in accordance with policy terms or general losses incurred by the company. A good indicator of how well an insurer has prepared for potential liabilities is its reserve levels.
Also, after an insured event, such as a death, occurs, the insurer must review all aspects of the policy – including determining who is responsible for fulfilling policy terms and whether any payments should be made.
How quickly and accurately the insurer responds to claims can indicate its overall stability and customer service abilities.
6. Review your policy regularly
The idea here is to update any information that has changed, such as marital status or the number of dependents on your policy. If anything changes that could impact your coverage (such as a new job), take steps to get updated as soon as possible so that you’re fully protected.
As a mum, you are naturally concerned about the wellbeing of your family. Ideally, you would like to be able to provide financially for them in case something happens to you. Life insurance is one way of achieving that aim.
However, before taking out a life policy, it’s important to carefully consider all the key factors that we’ve covered in this guide. We hope you can finally get a plan that secures the future of your loved ones!