Figures from the Office of National Statistics show that for the first time in nearly 70 years, women over 40 are having more babies than the under 20s.
The reasons cited for this change includes advances in fertility treatment, more women in higher education, attitudes around the importance of a career, and the rising costs of childcare.
The data also shows that the average age of having a child is now 30.3 - a figure that has been increasing since 1975.
Here at PayingTooMuch.com we found the financial implications of this trend very interesting. Why? Because, if a woman in her mid 40s has a baby now, then it is likely that she will reach retirement before the child reaches independence. And as the mother gets older, her risk of dying increases.
The Importance Of Life Insurance
With the costs of raising a child outstripping the rate of inflation (the cost of childcare rose by 4.3% last year yet inflation stood at 0.2%), making sure you have some form of life insurance is so important, no matter what your age - but especially if you have a young child.
So, revisiting your existing life insurance arrangements makes sense. Even if you took out a policy in your 20s, you may need enhanced cover limits now due to new family members and / or an increased mortgage amount.
The good news is that life insurance premiums have decreased over the last few decades, so it may be cheaper to get enhanced cover than you think.
In the first instance, you may wish to talk to your existing insurer, if you have one, to see if you can increase the sum insured. If you have a guaranteed insurability option within your policy, this typically should not be a problem.
So, if you are an older parent (a mum or dad), what else do you need to consider when choosing your life insurance?
Don’t Underestimate The Cost Of Raising A Child
You may already have a decreasing mortgage term insurance policy (this is a policy where the amount payable decreases in line with your outstanding mortgage balance).
While this will leave a roof over your loved ones’ heads if you die before your mortgage has been paid off, there are additional, potentially larger costs you need to factor in for a child as they grow up. For example:
- Childcare costs;
- Hobbies, school trips, uniforms, school books;
- University fees;
- Driving lessons and the purchase of a car;
- Wedding costs;
- And so on.
In fact, a recent study revealed that the average cost to raise a child born in 2016 to the age of 21 is £231,843. This figure is based on them going to a state school.
- For a child who goes to a private day school this cost rises to £373,000 by the time he/she hits 21.
- And if you want your child to go to boarding school, you’ll need an average of nearly £500,000.
These figures all make for quite surprising reading and highlights just how important it is to have some form of financial provision in place for your child should you die.
While the money won’t take away the distress of losing a parent, at least it means that they can still have the life you want them to have.
With women today now waiting longer to start or expand their families than those in previous decades, the chances of them leaving a child who is still financially dependent on them is greater. That is why having adequate life cover in place is still essential for later life.