Life Insurance for Parents

As parents, your world revolves around your kids. Whether they are younger or growing up, there’s always a need to protect them from life’s unexpected curveballs. Taking out life insurance is a way of making sure they are financially protected if something should happen to one of you.

Whether you are new parents or your children are quickly turning into adults, life insurance can give you peace of mind.

In this section, we’ll look at:

• Why life insurance is important when you’re a parent
• Different types of life insurance for parents
• Do you need a joint policy?
• Top tips for keeping the cost of life insurance down

Why life insurance is important when you’re a parent

As parents, you are usually the ones responsible for paying the bills, doing the food shopping and paying for childcare or school fees. If something was to happen to either or both of you, how would your family continue to meet these financial commitments?

Life insurance for parents can offer a safety net so that your family can continue paying the mortgage and other important living costs.

Different types of life insurance for parents

Deciding on the type of life insurance you need can depend on your circumstances. Consider what it is you want to protect. Will your children need help paying off the mortgage, or do you want to make sure they don’t have to fork out thousands for funeral costs?

Whatever your thoughts, there are a number of different types of life insurance available. The most straightforward is Level Term life insurance, which provides a lump sum pay-out if you passed away during the length of the policy. You can decide on the amount of cover and how long the policy lasts, so think carefully about any financial commitments that might need to be covered.

Family Income Benefit is similar in that it will pay out if you pass away during the policy, but the pay-out comes in monthly instalments to provide a steady income. This could be helpful as it’s more manageable than a lump sum.

There is also protection available if you were to fall ill, which can also have a devastating impact on your family. Income Protection can provide financial support if you become unable to work due to illness or injury. It could help your family to continue paying the bills if you were off for a prolonged amount of time. This type of policy usually covers between 50-70% of your salary.

For more serious conditions, Critical Illness cover can ensure financial help is available while you recover or undergo treatment. A lump sum could help to pay for household bills or additional childcare. It’s important to note that the illness must meet a policy definition.

Critical Illness cover can also sometimes include your children, providing additional protection if your kids were to be diagnosed with a certain condition.

Do you need a joint policy?

When taking out life insurance you have the option to take out cover just for yourself, or for both of you as a joint policy. Joint policies can be cheaper, but they will only pay out once.

If you are taking out life insurance to cover the mortgage, a joint policy could be a suitable option. This is because the mortgage will only need to be paid off once. If you need different levels of cover, you might be better off with two single policies. For instance, if you or your partner is the breadwinner, you may wish to take out more cover than the other.

Consider your personal circumstances and what you’re trying to protect before making a decision on a single or joint policy.

Top tips for keeping the cost of life insurance down

There are a number of tips to make sure life insurance is affordable:

• The younger you are, the cheaper it can be. This is because you are a lower risk to the insurer and your premiums will likely be cheaper than if you took out a policy when you’re older.
• Adopt a healthy lifestyle. The healthier you are, the cheaper your cover might be. Follow a healthy diet, quit smoking and manage any health conditions; it’ll be reflected in your premiums.

• Don’t over insure yourself. Make sure you look at the right policy to suit your needs, and review your policy regularly to make sure you have the right cover.
• Guaranteed premiums. Look for policies that offer guaranteed premiums, instead of reviewable. Although guaranteed premiums may be more expensive at the outset, reviewable premiums are likely to increase while guaranteed will always stay the same.
• Use a broker. An insurance broker can provide helpful advice and compare the leading providers to find the right policy that suits your circumstances.

This calculator is for informative purposes only and is not to be taken as financial advice, for accurate financial advice please consult with an advisor from Caspian Insurance.