Life Insurance for Parents - Everything You Need to Know
There are certain milestone moments when people tend to buy life insurance. Having children is one of them as it helps you protect those who rely on your income.
As a parent, you probably have a to-do list as long as your arm, as well as never-ending costs. It’s easy for life insurance to slip to the bottom of your priorities, but it doesn’t have to be that difficult. If you haven't yet got life insurance, here's everything you need to know.
Is life insurance worth it?
If you are in full health, it can be easy to assume that there’s no urgent need to apply for life insurance. But what would happen if your health changed? Would your family have enough savings to pay for the mortgage/rent and bills?
Life Insurance can be a back-up if something happens to you. No one wants to think about a world where their kids grow up without a parent. But it's important to understand that this is not a farfetched thought. The sad reality is that on average, a parent dies every 22 minutes in the UK. With Life Insurance, you can at least know that your family will have a lump sum, to alleviate any financial worries.
You just need to apply for life insurance and answer a few questions. We can help you with the legwork, so you can concentrate on raising your family.
What are the different types of life insurance?
Life insurance cover includes level term and decreasing term life insurance. So, let's take a deeper look into both policies.
Level term insurance can cover everyday living costs, mortgages and bills. This type of policy works on a fixed basis for a set amount of time. This means that it provides the same pay-out whether you were to pass away at the beginning or just before the end of the policy.
Decreasing term, or mortgage life insurance can help you cover a repayment mortgage. As you continue paying off your mortgage, your cover will decrease in line with the amount left.
Other protection policies can help you protect your income against ill health. Would you be able to afford your current lifestyle if you couldn't work due to sickness or accident? Critical illness cover and income protection can help with this.
Critical illness cover could provide a pay-out if you were diagnosed with a specific critical illness. Income protection could replace a percentage of your income while recovering from an illness or injury.
What are the best policies for families?
Choosing the right type of cover can feel like a minefield. It becomes a lot easier once you focus on what you are hoping to protect. For instance, do you want to ensure your family won't have to worry about paying for the mortgage? Then, mortgage life insurance is perfect for you.
Or do you want a steady income if you should be unable to work due to illness or injury? Check out income protection. Do you want a lump sum to help cover any unexpected costs due to being diagnosed with a specified critical illness? Check out Critical Illness Cover.
You may have more than one outcome that you are trying to protect your children or another half from. What if you wanted to cover your mortgage, but also ensure financial support if you fell ill?
You can take out more than one policy to help cover different eventualities. This can give families huge peace of mind that no matter what happens, help isn’t far away. You might decide to take out life insurance and critical illness cover together. You can do this as a combined cover or two separate policies. If you decide to take out combined cover, it’s important to know that it will work on a first-event basis. It will only pay out for whichever circumstance happens first.
Getting the right amount of cover
When applying for life insurance, you need to decide how long you want your cover to last for and the pay-out amount. This is important if you have kids. You should consider how long it is until they are likely to be financially independent. The latest stats by the Office for National Statistics revealed that +50% of under 23-year-olds still live with their parents.
Something else you need to think about, is how much money your family would need. You can check this by using our online calculator.
This can be a tricky decision to make, so give it some thought. If you’re unsure, our team are on hand to help you make the right decision when it comes to your cover.
Get in touch today to get a free quote or ask us any questions you might have about life insurance and protection!
Please note the above does not constitute as financial advice and may change dependent on individual circumstances and budgetary requirements.
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