Whether you are new parents or parents with older children, life insurance offers excellent financial protection should the worst-case scenario happen. With so many options out there, it’s essential to understand why life insurance for parents is beneficial, how much it costs and which option is ultimately best for you.

Why parents should consider getting life insurance

If you or your partner pass away, knowing that your family will be financially covered is comforting. Your children are financially dependent on you, and the loss of your income could mean that your partner can no longer afford to cover the mortgage and debt payments and the family living costs.

What life insurance options are there for parents?

There are different types of life insurance available for parents. The best option for you will depend on what your requirements are.

Life insurance policies are split into two – term life and whole of life

Life insurance policies are split into two – term life and whole of life

Term life

Parents receive coverage over a predetermined period with a term life policy, usually between 20 to 30 years. Term life policies are further split into two types – level term and decreasing term.

A level term policy will ensure that your payout value stays the same throughout the predetermined period, whilst a decreasing term will see your payout value reduced with time. The latter is usually more affordable and is particularly good if you want to cover mortgage payments or the period until your children are no longer dependent on you.

Whole of life

A whole of life policy tends to be more expensive than term life insurance. This is because you and your partner are covered for life. As a result, there is guaranteed payment. This type of policy is excellent if you want to leave an inheritance or cover costs such as inheritance tax.

How much does life insurance for parents cost?

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Parents’ life insurance costs will vary depending on age, health, smoking status, medical history, and occupational risk.

Considering a level term policy over 30 years for a non-smoker, the average cost of life insurance for parents in their 30s is approximately £8 per month. That cost rises to £18 per month for parents in their 40s and £30 per month for parents in their 50s.

The benefit of joint life insurance for parents

Many parents will find themselves working with a tight budget, so the prospect of adding monthly costs can be daunting.

A brilliant way to circumvent this issue is by considering a joint-life insurance policy. These can be up to 40% cheaper than taking out individual policies and can provide financial protection should one or both parents die.

You should note that a joint life insurance policy only pays out once, typically on the first death. However, some insurers do provide policies that only payout after the death of both parents.

If you’re considering a joint life policy, take a look at this helpful guide which provides an overview of everything you need to know about joint life insurance.

What does life insurance for parents cover?

What your life insurance policy covers depends on the agreement you have with the insurance provider. In general, life insurance for parents can cover:

• Mortgage payments
• Debt payments
• Family living costs
• Inheritance tax
• Loss of income
• Funeral costs

Family income benefit

If you’d like your life insurance payout to be made monthly instead of one lump sum, you can opt for a family income benefit. Through this option, the surviving spouse will receive the insurance claim tax-free each month, allowing them to better budget and manage finances.

This option is ideal to ensure that your family can maintain the same level of lifestyle and cover expenses if they lose one income.

What’s the best length of life insurance coverage for parents?

The coverage period will depend on why you want life insurance. If you and your partner want financial protection whilst your children are still financially dependent on you or whilst you still have a mortgage, a term life insurance policy will be best.

You can work out how many more mortgage or debt payments you have left or the time until your children are likely to be financially independent and set up your life insurance term accordingly.

On the other hand, if you’d like to leave a loved one an inheritance or cover inheritance tax, you could opt for a whole of life policy.

What to consider when getting life insurance for parents

Life insurance is an excellent tool for parents that want to ensure their loved ones are protected in the worst-case scenario.

So, when looking for insurance, there are certain things you and your spouse should consider.

• Get multiple quotes and compare. Try not to go for the first quote you receive, as insurance providers can sometimes be flexible on prices.
• If possible, try to lower your risk. This can be putting a stop to smoking or taking part in less hazardous hobbies.
• Only include what you need in your policy so that you and your spouse aren’t paying for options that you don’t need. In addition to this, you should ensure that everything you want is included to avoid any nasty surprises.

If you’re considering life insurance as parents, get in touch with an insurance provider who will be able to take you through all your options in detail and help you decide which policy is best for you.