Is Life Insurance a Smart Money Decision for Moms?

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Life Insurance

For busy moms, there are dozens of Life Insurance decisions that must be made every day to keep the household running smoothly. A lot of these choices will also impact the weekly budget. From the big—like buying a car or choosing a school—to the small (like what to serve for dinner), there’s a cost attached to most everything moms decide.

It’s easy to get caught up in the day-to-day planning of raising a family and neglect thinking too far into the future. But when you have a family, it may be a smart move to make plans for any event that might come your way.

Life insurance is one way to do this, but it may not be an option you’ve thought that much about. You may think that life insurance isn’t for you, might feel your family is set because your partner is covered, or simply not want to “tempt fate” by getting a policy.

Whatever your reason for not getting life insurance, you might want to reconsider. A policy could be an important smart money decision for you and your family.

Why People Buy Life Insurance

Life insurance is designed to help people protect their family’s financial future in the event of death or being diagnosed with a terminal illness (depending on the policy). It can be difficult or even upsetting to think about either happening to you or your partner, so what life insurance could really do for your family might not be fully appreciated.

For many people, life insurance is a way to replace a breadwinner’s income should they no longer be there or able to provide for their family. This way, bills that will still need to be paid—from the mortgage and car payments to smaller expenses, like electricity and groceries—can be taken care of. This could give your spouse time to get back on their feet or allow them to take time off work to cope with the loss.

Others may see life insurance as a way to help their family maintain its current lifestyle. When a loved one passes away without it, loved ones are sometimes forced to sell the family home or pull children out of private schools because they can no longer afford the payments or fees. Life cover could help your family avoid big changes like these, during what is already a difficult time.

Finally, life insurance could be a way to help your family have the life you’d want for them, even if you’re not there to see it. The benefit might be used to pay university fees, put a down payment on a first home or fund travel.

Ultimately, how you or your family might use life insurance is up to you. But as you can see, there are many ways that it could help, should the worst ever happen.

Life Cover for Working Moms

Working outside of the home is something many moms now do to help contribute to their household’s finances. You may be one of the growing number of women who are their family’s primary breadwinner or earning a second income (either full or part-time) to help pay the bills.

For many couples, covering the primary breadwinner with life insurance is an easy decision. Losing that income could have a huge impact on the household finances. The same is often true for single parents, who may feel even more need to get covered. However, underinsurance is an issue in many Western nations, and one that may impact women more than men.

One study out of New Zealand highlights this insurance gap for women. Researchers found that there were many factors that keep women from getting life insurance or buying too little when they do. Women holding part-time or casual jobs may not see the value in life insurance for themselves. Their income may play only a small part in paying the bills, so covering mom might not be seen as a priority.

Another factor is a general undervaluing of the work women do. A US study found that 66% of wealthier single women did not have enough life insurance. The study also found that all women had lower amounts of life cover compared to men, even if the woman was the primary breadwinner! Women and couples may be underestimating how important their paycheque is, or possibly letting traditional gender roles play a part in their decision making.

No matter how much you earn, life insurance might be a good idea for working moms. Even if your family doesn’t rely on your paycheque to pay the bills, the payout from a life cover policy could be useful. The money could allow your spouse to take time off work to care for your children and cope with their loss. It could also help them pay any final expenses, such as planning a funeral.

What About Stay-at-Home Moms?

Many families understand the value of purchasing life insurance for mothers working outside of the home. If the household relies on your paycheque to make ends meet, then it could make sense to have a plan in place in case this second income was lost. But could it also make sense to buy life insurance for stay-at-home moms (SAHMs)?

While SAHMs may not earn a traditional salary, they do contribute to the household finances in important ways. Budgeting and finding strategies to stretch your partner’s paycheque are valuable skills that many moms have mastered.

If it’s still hard to estimate the financial value of a SAHM, think about it this way: should there come a time when you aren’t there or are unable to take care of your home, what would your family do? They may need to hire someone to help with all the jobs you normally do. Things like housekeeping, cooking and childcare can be expensive.

You may be lucky enough to have a support network ready to step in and lend a hand around the house, should they ever be needed. Even so, your family may still have additional expenses. They might need to order takeaway meals more often during busy times of the year, rely on babysitters when family is out of town, and hire taxis or pay for public transportation to manage the daily school run.

A life insurance policy covering a stay-at-home mom might help your family carry on in your absence. The money could help pay for general assistance in the home. It could also cover medical bills should you develop a terminal illness or for in-home care if you are seriously injured and need a nurse.

Things to Consider When Looking for Cover

Finding the right life insurance policy can be a balancing act. There are many things you may need to consider when looking for cover and comparing policies.

Needs vs. Budget – Many families live within a budget and may be sensitive to the cost of life cover. It might be tempting to just choose the cheapest policy, but the cover it provides may not suit your family’s needs. A more careful review of your financial situation could help you figure out how much cover you may need, which can be weighed against the household budget.

Type of Policy – Depending on the type of policy you get, you may be asked health questions to help decide how much cover you can get and at what price. This process can be lengthy and may require you to visit a doctor. On the other hand, guaranteed acceptance policies are generally quicker to buy, but may offer less protection at a higher price. Balancing between convenience and your family’s needs may come into play when choosing a policy.

Adding Extras – Some life insurance policies may offer optional extras that could provide more cover in certain situations. This might include receiving more money if death is caused by an accident, family discounts for insuring both you and your spouse under one policy, or the option to cover your children as well. Deciding to add these (or not) may depend on your family’s needs and budget.

The Insurer’s Reputation – Before settling on a policy, it may be a good idea to see how the company stacks up. Online reviews may give you a better understanding of the product or an idea of the company’s commitment to customer service. However, you might want to consider who wrote the review before taking it at face value. Disgruntled customers (who may not have taken the time to fully read the terms of their policy) may be more likely to leave a negative review than a happy customer.

Providing Peace of Mind

Life insurance could be a smart money move for moms. It’s one financial tool that could help protect your family’s finances against an uncertain future. With many different types of policies for sale, you’re likely to find one that meets your needs and budget. That way, you can have peace of mind knowing that you’ve prepared for the worst life can throw at you.

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