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Family life insurance

Families come in all shapes and sizes and you need to protect yours now and in the future. Although it may seem premature to worry about what would happen to your children and partner financially if you were to die, it could save a lot of suffering and heartache in the long term. Especially if yours is one of the 35% of families in the UK who have no savings available. Family life insurance is well worth considering along with all the other things you plan for in order to keep your family safe.

Stay covered with family life insurance, family in front of the table

What is family life insurance?

Family life insurance is a combination of life insurance policies which will financially support your family if one of its members dies or is critically injured. With family life insurance policies as with other types of insurance you make monthly payments which ensure that they pay out a lump sum in the event of your death in order to support your family financially.

Types of family life insurance

There are three main ways to look for family life cover quotes and you should consider your needs when deciding which type of cover fits best.

You could go for level term life insurance, which means that whatever the term you decide on, usually 5, 10 or 20 years depending on the age of your children, the amount insured stays the same if you die during the term of the policy.

Decreasing term life insurance is a way of managing the amount of insurance you have against the needs of your family as time passes, or simply put, the payout decreases over the policy term as your children grow to become independent adults or your mortgage gets paid off and your financial commitments decrease.

Lastly whole of life insurance policy, which is when you are covered for the whole of your life and the sum insured is paid to your family when you pass away. When looking at family insurance quotes and options you will often find that this is the most expensive as the payout is guaranteed unlike insurance with a fixed term.

Joint and individual policies

There are a few options, you can either take out your life insurance policy as an individual or combine the policies so that you have joint cover with your partner. A single life insurance policy is a great idea for single parents as you can arrange the policy to cover both debts and any future expenses you family may incur. You can name a beneficiary of your choice or write your policy in trust for a child which means that they payout won't have inheritance tax added.

Joint life insurance means that both parents are covered by the same policy which often works out to be more economical than two separate individual policies. A joint life insurance policy would cover the financial contributions that both partners make to the family, either by working outside the home or as a stay at home parent. The insurance policy payout would cover any expenses your family may have to pay such as additional childcare or cover a drop in salary to maintain their current lifestyle. A joint family life insurance will only pay out once, on the first death, which means that you need to ensure that the sum insured needs to be enough to at least cover your outstanding mortgage payments to ensure that your family is fully financially supported in the future.

Outgoings that you may need to consider in addition to mortgage or rent payments, groceries, clothing, after school activities for your children and hobbies that the adults in the household do, monthly energy bills including gas, electricity, water, and council tax. It is also wise to factor in inflation to the payout amount you need, especially if you children are still young as their future living costs may rise significantly.

With a joint life insurance policy if one of the policy holders dies during the term the amount insured will automatically be paid to the surviving partner which can smooth the difficult financial aftermath of a death. It is important to remember though that the surviving parent would need to then take out their own individual life insurance policy if they wanted further cover which may be costly as they would now be older. If both insured parents should die at the same time then the sum to be paid out would go into their estate and be paid to their beneficiaries unless the policy is written in trust.

How much life cover do you need for your family?

With the average UK household debt at a record £15,400, it’s more important than ever to consider how your family would cope if you were to die. As well as taking the age of your children into account (in other words, how long you wish to support them), other things you might wish to consider before beginning an application for life insurance include:

  • Food, clothing and general living expenses.
  • Mortgage payments, rent and utility bills.
  • Household debts.
  • Childcare and education costs.
  • Travel and transport expenses.

You might not be replaceable, but your income is and could make the world of difference to your family.

How much does family life insurance cost?

The cost of family life insurance is based on the level of cover you need and the length of the term you are looking for, it can be bought for only a few pence per day. It's best to take out life insurance cover as soon as you can, as the younger and healthier you are when you take cover out, the cheaper your life insurance premiums are likely to be. The monthly premium payments that you make can vary from provider to provider so it's worth comparing what each company has to offer and checking exactly what is covered. If you have additional risk factors such as being a smoker or having any diagnosed conditions they will be taken into account when calculating the premium, alongside your age and lifestyle.

Based on customers looking for a level term policy (without critical illness cover), with a total cover amount between £150,000 and £200,000 for 10 – 20 years, show the average monthly premiums paid by individuals and families from different age groups as following:

Age group Monthly cost of joint life insurance only Monthy clost of single life insurance only
18-29 £10.88 £6.15
30-39 £17.56 £9.64
40-49 £33.72 £18.84
50-59 £63.07 £37.98
60+ £215.13 £138.25

Family critical illness insurance cover

Terminal illness cover is an insurance product which covers you in the event of being diagnosed with a terminal condition and given less than 12 months to live. This type of family insurance cover is often included within life insurance policies so it is worth checking your family life insurance quotes as a payout under these circumstances could offer you freedom from financial concerns during the last few months of your life.

Critical illness cover can be added to your family life cover, as in the UK you are far more likely to suffer from a serious illness before the age of 65 than die. This type of cover is suitable for everyone in the family including children, and pays out if anyone covered is diagnosed with a serious illness. This extra layer of protection can be put in place in order to ensure that in the event of critical illness you could cover the lost income of a breadwinner, or to fund additional medical treatment for a child.

Updating a family life insurance policy

When considering family life insurance quotes consider whether you will need to update your cover in the future. If you’re planning a new baby or a move to a bigger house then some policies let you increase your cover in order to make sure all of your new outgoings are fully covered.
The cost of family life insurance depends on the level of cover you are looking for and your family history, your age when you take the policy out and the type of life insurance you go for.

Working out your outgoings and how much life insurance you need for your family is the first step in structuring a comprehensive family life insurance plan.

Family history and life insurance

Through no fault of your own, family medical history can have a huge impact on the price you pay for life cover. Insurers will want to know if you have any close relatives (parents or siblings) who have suffered from certain medical conditions before the age of 60.
With increased risk comes increased cost, and a family history of cardiovascular illness, cancer, stroke, Alzheimer’s disease and Parkinson’s, to name but a few, can elevate insurance premiums considerably.

However, no two quotes are identical, which is why using a comparison site is a wise move that can save you both time and money

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