Financial protection after divorce: 4 crucial reasons to put your financial security first

As a divorced woman, you may be juggling many conflicting demands on your finances, from childcare to mortgage repayments.

So, investing the time and money to review and update your financial protection may not feel like an immediate priority.

Indeed, research suggests that there is a significant financial protection gender gap:

• The 2025 Life Insurance Index, commissioned by UK-lifeinsurance.com (28 May 2025), has revealed that women are twice as likely not to have life insurance coverage as men.
• According to the Actuarial Post (2025), only 11% of women have income protection compared to 17% of men.
• Research published by Health & Protection (7 March 2025) found that 65% of female single parents have no protection insurance at all.

Read on to discover four reasons why it’s crucial that you, as a divorced woman, put a financial safety net in place by taking out cover such as income protection, critical illness cover, and life insurance.

1. Safeguard spousal and child support payments

Life insurance could offer valuable protection if your ex-spouse or civil partner is required to make spousal maintenance or child support payments as part of your divorce settlement. In some cases, the courts may order one or both parties to obtain life insurance policies to protect their dependants.

By putting appropriate insurance in place to cover your ex’s life, you’ll have the peace of mind that you and your children will continue to receive financial support – either as a lump sum or as monthly payments – in the event of their death.

A study by Legal & General (2 April 2025) has found that women see their income cut by 50% in the year following divorce, compared to a 30% fall for men. What’s more, women are twice as likely to reduce work hours post-divorce due to childcare responsibilities.

So, spousal and child support payments may be a vital source of income – and well worth protecting.

2. Provide security and stability for your dependants

In addition to insuring your ex-spouse or partner’s life, you may want to take out life insurance to cover your own – or you might be required to do so as part of your divorce settlement (as mentioned above).

This is likely to be especially important if you’re a single or primary caregiver.

A life insurance payout could help your children pay for essentials, such as housing and education, if something happens to you.

You may also want to speak to a financial planner about putting your life insurance in a trust so that any payout goes directly to your beneficiaries. This could ensure that your children receive the money as quickly and tax-efficiently as possible.

Read more: The importance of putting life insurance in a trust if you are a woman with dependants

3. Protect your financial independence if you’re unable to work

As a divorced woman, you may be solely responsible for running your household and caring for your children. As such, income protection could be a wise investment.

This type of insurance will provide regular monthly payments if you become unable to work due to illness or injury. These funds could allow you to keep on top of everyday costs and maintain a comfortable standard of living.

Most policies will continue to pay out until you return to work, retire, or the policy term ends. So, income protection may not only provide essential financial support, but also alleviate the stress and uncertainty that could be caused by an unexpected work break.

This might allow you time to recover and care for your family, without worrying about how you’ll pay the bills.

4. Ensure your family is provided for if you become critically ill

Unfortunately, no one can predict what’s around the corner. But you can put protection in place to ensure that you and your loved ones are financially prepared for any unexpected life events that arise.

According to Contractor Advice UK (23 April 2025), 1 in 6 women will suffer a long-term illness at some point, and critical illness cover can provide a lifeline to those affected.

Unlike income protection, which covers a broad range of illnesses and injuries, critical illness protection is designed to provide support if you’re diagnosed with a specific, serious illness – these will be listed in your policy.

It will usually pay out a lump sum to help you cover costs, such as medical treatment or mortgage repayments.

This could provide reassuring continuity for you and your family during challenging times.

I can help you choose the most appropriate type and level of protection for your needs

Assessing your financial protection needs isn’t always straightforward, especially if you’re adapting to new circumstances following a divorce.

I can help you:

• Review any shared policies you have from your marriage
• Understand your post-divorce financial protection needs
• Identify suitable types of protection for your current circumstances
• Calculate the level of protection necessary to meet your goals
• Factor the ongoing costs of protection into your financial plan
• Explore tax-efficient options such as placing life insurance in a trust.

If you’d like to find out more about how I can help you put a financial safety net in place following your divorce, please get in touch.

To find out more, please get in touch by email at lottie@truefinancialdesign.co.uk or call 03300889138.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

Note that life insurance and financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

APPROVED BY 2PLAN WEALTH MANAGEMENT ON 18.07.2025