Starting a family is a big responsibility and can get very expensive with all the paraphernalia that comes with having a baby.
The last two years have taught us a big lesson when it comes to family finances and it is even more important to be prepared for all eventualities. Life insurance for parents is an insurance policy you can take out to help make sure your family receives financial support if you pass away.
As soon as you become a parent, there’s a little person who depends on you completely. Life insurance is almost like the financial version of a car seat—you hope you’ll never need to put those crash-safety features to the test, but it’s good to know the protection is there.
The cost of raising a child is expensive, even before factoring in considerations like private education and university contributions. There are policies available that run until your child reaches maturity – and after they’re 18, it’s up to you what “maturity” means.
Providing for your child to protect them against the unexpected is a way to give yourself peace of mind and enjoy the present with them more fully.
If the worst does happen, your insurer will pay a lump sum to your family, which they can then use to clear a mortgage or a debt, or cover day-to-day expenses or specific obligations such as school fees.
There are three main types of policy. Two have fixed terms, while the other is indefinite. It is important to shop around and get several life insurance quotes to compare them before you decide which is the best option for you and your family and use an Initial Enrollment Period Calculator.
- Level-term life insurance: The sum insured is the same amount no matter when you pass away during the policy, provided it is still active and the repayments are still being made
- Decreasing-term life insurance: The pay-out decreases as the policy term goes on. This type of policy is designed to cover long-term financial commitments like mortgages, because as time goes on, your dependants will have less to pay off if you die
- Whole-of-life insurance: This type of policy covers your whole life and is guaranteed to pay out when you die. Whole-of-life insurance is more expensive than the other two types because there will always be a pay-out at the end
The life insurance cover amount you take out should be enough to cover what’s left to pay on your mortgage and you can then add extra financial cover for your family to help them cover household bills and day-to-day expenses and any other loans that you have taken out
How Much Does Life Insurance Cost if You’re a Parent?
Life insurance can often be more affordable than people expect, although premium rates vary depending on your age, health and lifestyle. The average life insurance cost in the UK can be as little as £13.24 a month but this can vary depending on how much cover you need. The more cover you get and the longer the term you want, the more it costs.
What information do you need to apply
A life insurance application will ask questions about your personal situation, including your finances, employment, health and medical history and hobbies. You’ll need to make sure your responses are accurate and honest to make sure your dependants would receive a payout if you pass away.
Life insurance applications take your current and past medical health into consideration, which affects what your life insurance premiums will be and may want to get a report from your GP, to assess the risk of offering you a life insurance policy.
Some insurers won’t ask to see your medical records when you apply, but it is important not to withhold any important information about pre-existing conditions, as they could refuse to pay out on a claim.
Do you have a life insurance policy?