Mother selling themselves short with insurance

Saturday 9 March 2013

Children will be showing how much they value their mothers this weekend with cards and flowers.

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HELEN PRIDHAM

But most mothers are undervaluing themselves, according to insurance statistics. If women get sick or die, their families are woefully under-protected.

According to Legal & General's 2013 Value of a Parent report, a Scottish mum is worth £32,289 a year – but nearly half have no life insurance and almost three-quarters have no insurance against illness.

Despite nearly three-quarters of parents saying their top financial priority is to ensure their children are looked after if they were unable to due to death or illness, barely one-half of women (51%) have life insurance in place, only just over one-quarter (27%) have critical illness cover, and even fewer have income protection (13%) or family income benefit (12%).According to Scottish Provident, women in their thirties typically insure themselves for nearly one-third less than their male counterparts and this gap gets progressively wider and becomes a significant gulf for those in their sixties, by which time men have three times as much cover in place.Most families assume life insurance is a top priority, but the chances of parents of dependent children dying are considerably less than if they were to suffer a serious illness which will prevent them working for an extended period.The insurance required to cover this situation is known as income protection. It is available for full-time housewives as well as working mums.An income protection policy will start to pay out a replacement income once you have been off sick, say for three months, until you recover.The good news for women is the cost of this type of insurance has actually fallen since last December when insurers had to start charging men and women the same premiums under European Union law.However, some of the lowest-cost policies are available from friendly societies such as the Cirencester and the Exeter, who charge £20 per month or less to women under 40.Life insurance is also important but having to buy multiple policies can put people off, especially mums on limited budgets. One solution is the LifeSearch Real Life Cover which is an all-in-one policy providing life cover, critical illness and short-term illness and unemployment insurance. For a woman of 40 it would provide £100,000 of cover for a 25-year term for just under £40 a month.If you need help working out how much and what type of protection insurance you need, it is still possible to get advice from an independent financial adviser without having to pay an upfront fee. Some advisers, such as LifeSearch, will provide help over the phone.One of the main reasons people give for not having enough insurance is that it is too expensive. But L&G's research suggests parents are spending, on average, three times the amount on treats and pocket money than they are on insurance.A rule of thumb in the past was that life cover should be 10 times your earnings, but Bonnie Burns at L&G says: "To get an idea of the type of cover appropriate to your specific situation, it is a good idea to calculate the bare minimum you can afford to live on each month."The first priority is to ensure you have enough insurance to keep up the payments on outstanding debts such as mortgages, or be able to pay them off altogether.You also need to think about how much replacement income is required to cover all other family expenditure.

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Mother selling themselves short with insurance

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