Most parents will agree that raising a child is expensive, so raising a child on one income is particularly tough. Although a small percentage of the population earns enough to choose to solo parent, a staggering 38% of children in this country live with only their mothers. We’re not alone: the number of single-parent families is increasing around the world. In the US, single-parent households have more than tripled since 1960, with 80% of these households headed by mothers. In the United Kingdom, 21% of children live in single-parent families.
With so many women in this country being solely responsible for their children, often without any financial support from their children’s father, it is clear they need to ensure that their children will be provided for should something unforeseen happen to them. It is vital that single mothers protect their ability to earn an income, because there isn’t another person in the household who can generate an income. When a single mother loses her ability to earn an income, the financial consequences can be devastating.
This Women’s Month, I encourage single mothers to empower themselves with the peace of mind that their income will be replaced if they are unable to work because of an accident or illness. Here are a few things to consider:
- Income protection is a life assurance product that will allow a single mother to receive a payout from a life assurer if an unforeseen event, such as an illness or injury, results in her no longer being able to work. A payout from this product can, in such instances, be a life-saver, enabling her to continue supporting her family financially.
- Read the policy document carefully. It is important to understand exactly what income protection policies cover you for, and for what amount.
- You can protect your income against events such as the inability to work because of injury or serious illness, such as cancer. You can even buy products that will pay you an income if your child becomes seriously ill.
- You can protect your income with a product that pays out either a monthly amount or a lump sum. Both have advantages, so the advice of an accredited financial adviser is essential.
- A financial adviser can take you through the policy document, and explain how the cover works and what you are covered for, so you understand what you are paying for and what you will be able to claim for.
- It is recommended that you monitor your benefits at least once a year. This will enable you to ensure that the benefits are up to date and continue to meet the needs of those who depend on you financially.
Single moms need a plan and structure to cope with the demands of working and looking after children. They often have additional expense burdens that aren’t borne by dual-income families. The same approach applies to their finances. The pressures of single parenting make it absolutely critical for single mothers to have income protection in place, in case they get sick, become disabled or die. Insurance can enable them to protect their livelihoods and families when they cannot.
Karen Bongers is a product actuary at Sanlam Personal Finance.