Protecting your loved ones’ financial futures

What happens to your loved ones if you or your partner pass away? No one likes to think about the loss of a loved one, but sensible financial planning can be very prudent to help your loved ones if the worst happens. It is not sensible to rely on Government support, as support for widowed parents has been significantly reduced in recent years.

Currently, the maximum Widowed Parent’s Allowance (WPA) is £126.35 per week and this is based on how much your late spouse or civil partner paid in National Insurance contributions. You continue to get WPA until you either stop being entitled to Child Benefit, which is paid to help bring up a child aged under 16, or up to age of 20 if they stay in approved education or training, and if you earn under £50,000. WPA also stops when you reach the State Pension Age of 67.

If you are a homeowner you may also be able to get Support For Mortgage Interest (SMI) which is paid by the government to your lender as a loan which you need to payback with interest when you sell or transfer ownership of the property (unless the loan is being moved to another property).

There is no guarantee you will qualify for SMI and it only covers the interest on the mortgage up to £200,000 of your loan. You can only get support for up to £100,000 if you receive Pension Credit or of you started claiming another qualifying benefit before January 2009 and you were below State Pension Age at that time.

Payments for SMI can start either from the date you start getting Pension Credit, after you have received Universal Credit for 9 months in a row (as long as you are not getting certain income) or after you have claimed any other qualifying benefit for 39 weeks in a row.

Taking measures in advance to protect your loved ones is clearly a more sensible option and arranging life insurance that pays off your mortgage and or leaves a lump sum for your family to live off is therefore essential as part of your overall financial planning. The type of policy and the premiums for cover can vary significantly, so it is worth shopping around for the best policy to suit your needs.

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