By Dominique Bowen
Did you know that only a third (32.7%) of South African children are brought up by both their parents? Last year, Statistics South Africa reported that 42% of children aged 17 or younger live with only their mother, a small minority (4%) live with only their father, and about a fifth (21.3%) do not not live with either of their biological parents.
The unique non-nuclear household structure common across the country means that for the fifth of children who live with neither parent, grandparents and extended family are likely the primary guardians and caregivers for much of the child’s upbringing.
You may identify as a member of one of these groups of unsung heroes. The juggling act that is single parenting or guardianship means there’s little time to put your feet up. This reality is why, with all the burdens and worries you shoulder, thinking about your dependants’ wellbeing and care if the unthinkable were to happen to you is crucial.
In light of Women’s Month – when we as a country collectively celebrate, spoil and show gratitude to South African women – it’s an important time to look at the ways in which single parents and guardians, who are often female caregivers, can ease the mental and financial burden if something were to happen to them, living their children or dependants behind.
A lifesaver
“It’s exceptionally important for a single parent to have life cover, because they are their only source of financial protection for their child,” says Terence Tobin, a family-focused financial planner. “There’s no other parent who can look after them should something happen to them.” You may default to the assumption that your parents or siblings are well positioned to carry your children financially, even just their basic needs, but unless this is confirmed in a conversation in which they have explicitly shared that they are able and willing to take that on, it can be a big mistake. “I don’t believe you’d want to load that burden on family,” Tobin says.
Also think about the legacy you leave behind for your kids. Even if they are young when you pass away, there would be less disruption for them to bear if your policy financially covered their immediate and future expenses.
“Life cover allows you to create a legacy so that your child can remember you as someone who provided for them financially, allowed them to study further, or perhaps set them up in life (helped with a deposit on a property, or the purchase of their first car),” says Tobin.
Every parent should consider life cover, but this is especially critical for those parents who don’t have the cushioning of a surviving partner who would be able to help, to some degree, in absorbing the costs of raising a child.
It’s not one-size-fits-all
We know life cover is important to ensure financial and lifestyle continuity and offer a measure of stability to your loved ones when you are no longer around, but there’s a range of options available to you from various insurers.
When entering into a conversation with a broker or financial planner about the cover that’s right for you, Tobin recommends reflecting on the exact amount of income your dependants would need in order to not only survive but thrive in your absence. “This would include providing for their education, their housing, food and medical aid,” he says.
Beyond these bare basics, there are those additional budget line items that would ensure their standard of living isn’t severely impacted, such as extracurricular activities and holidays. “As financial planners, we need to know what that figure is to calculate the amount of cover that is required,” Tobin says.
Then there’s growth of that cover. Besides the battle against inflation, there’s also the natural progression of your child’s life and the associated costs. Do they need braces? What about specific equipment and tools for hobbies and activities they pursue later on? “You would need to make sure that the cover you take out grows at a sufficient rate to keep up with your child’s growing cost of living, and especially understand the escalation on those premiums so that they can be sustainable and affordable,” Tobin says.
Before signing on the dotted line, he also strongly encourages reading all terms of your policy so that you can rest assured that your policy will actually pay out as long as your claim event meets the various criteria.
Budgeting for it
The rising cost of living means household budgets are being pushed to their absolute limit, even causing caregivers to question whether life cover is something they can afford to keep.
Understanding this pressure, Tobin recommends reviewing your budget with a qualified financial planner who can take an objective view of your current expenses and help you cut down on these within reason.
Reassuringly, he also adds that some insurers offer policies starting with monthly premiums from as little as R100. “The cover might not be sufficient, but some money is better than no money left behind for a grieving child in order to look after their future,” he says.
PERSONAL FINANCE