Insurance

Single mothers even more at risk when losing their income

Most parents will agree that raising a child is expensive. So, raising a child on one income is particularly tough but a reality for many South Africans. According to research conducted by the Human Sciences Research Council (HSRC) and the South African Race Relations Institute (SARRI), more than 40% of South African mothers are single parents.

In 2020, a Gallup poll revealed Sub-Saharan Africa has the highest percentage of single mothers worldwide, at 32%.

Karen Bongers, Product Development Actuary at Sanlam notes that with so many women being solely responsible for their children, the importance of making careful provision should something unforeseen happen to them cannot be overstated, as there is not a second stream of income generated by another person in their household. When a single mother loses her ability to earn, the financial consequences can be devastating.

Bongers encourages single mothers to empower themselves with the peace of mind that their income will be replaced should they no longer be able to work due to an accident or health problem, or should they pass away.

In addition, a 2021 Sanlam study revealed that many South African single mothers have financial worries and a significant portion struggle to save money every month or do so on a consistent basis. Furthermore, 51% of single mothers are not able to easily afford household expenses. This makes it even more important for single mothers to protect their ability to earn an income as they often do not have the option of dipping into savings when a crisis strikes. While Bongers stresses that relying on savings to make up for lost income in the short term is not ideal as savings have been set aside for a different purpose, she says the inability to go this route means that even short-term income loss can be devastating, never mind a long-term permanent loss.

Plan of action

Here are a few things to consider:

Sole provider:

As single mothers are the sole breadwinners in their households, income protection becomes very important. A pay-out from an insurance product can be a lifesaver, enabling her to continue caring financially for herself and her family.

Ask an adviser:

This is where the benefit of a financial adviser comes in. They can take you through the documentation and explain exactly how the cover works and what you are covered for to ensure that you understand what you are paying for and what you will be able to claim for.

Annual check-in:

To keep life insurance top of mind it is recommended that you review your benefits at least once a year. This way you will ensure that the benefits remain up to date and continue to meet the needs of those who depend on you financially.

One last thing to consider

Know the detail:

It is important to understand exactly what you are covered for under each type of policy, and for what amount.
Income protection and disability cover would allow you to get a pay-out should an illness or injury result in you no longer being able to work. Disability cover typically pays a lump sum and can be ideal to help repay debt, should you become permanently disabled, whereas income protection cover can replace your monthly income if you cannot work due to illness or injury, either temporarily or permanently. Both have advantages, so the advice of an accredited financial adviser is essential.
Life cover can assist with your dependents’ long-term expenses if you were to pass away or can be used to pay off debt. Again, there is the option to choose a benefit that pays a lump sum or one that pays an income. One of the advantages of a death income benefit is that your dependents will be paid a steady monthly income for a specified period without the risk of the money running out too soon.
You can even get cover which pays a lump sum or income should your child become seriously ill. Such an event will not necessarily affect your ability to earn an income but will likely affect your income in an indirect way.

Get started today

Single mothers need a plan and structure to cope with the demands of working and looking after children.

The same approach applies to their finances. They often have additional expense burdens that aren’t borne by dual-income families, e.g., one parent can only take so much parent responsibility leave to care for sick children whereas two parents have double that amount of leave combined. 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 pass away. “Insurance can enable them to protect their livelihoods and families when they are not able to do so themselves,” concludes Bongers. Speak to us to learn more about Sanlam insurance solutions.