Family life insurance: protecting your loved ones

What is family life insurance?

Life insurance can help protect your family from money problems and make sure they can live the lifestyle they’re used to if you die. The type of cover you need depends on your lifestyle and your family’s needs.

Read our guide: What is life insurance?

Life stages and insurance needs

Let’s look at different stages in a typical family life and the sorts of cover that might suit.

Meeting someone special

Whether you're 27 or 67, it’s never too late to meet a partner. If you’re choosing to spend the rest of your life with someone, you’ll want to ensure a safe future for each other should one of you die. In this case, you might consider a joint or two single policies.

• Joint policies: This is where one policy covers both partners. It pays out when one partner dies. But it’s important to remember that, when it does, the policy ends. The remaining partner would need to take out new cover, if needed
• Single policies: The alternative is to take out two separate policies. Each policy pays out once. This provides more protection, especially if you have kids. And it means if one partner dies, there’s no need to set up new cover in case the surviving partner

Getting a mortgage

If you buy a home, life insurance can help cover the mortgage. Without it, your family might struggle to pay if you’re not around.

A common way to protect your mortgage is with decreasing term life insurance. This is a type of policy where the cover amount goes down as your mortgage debt reduces over time.

If you die during the policy term, it pays out a cash sum to help pay off the amount that’s left on the mortgage. Making life without you easier financially for those left behind.

Read our guide: Mortgage life insurance

Having children

When you have children, your priorities change. Since children are so dependent on their parents, it’s a natural feeling to want to help them get the best out of life even if you’re no longer around to be there for them. A term life insurance policy can leave a lump sum for things like school fees or living costs.

As your children grow

Kids cost more as they grow up. According to the Child Poverty Action Group, the cost of raising a child to age 18 in the UK can run into hundreds of thousands of pounds.

Life insurance can help them keep their standard of living if you’re gone. Types of policies that can help make sure that happens include:

• Level-term policies: Unlike with decreasing term policies, the cash sum paid out if you die stays the same throughout the term
• Increasing term policies: With these policies, the payout goes up over time to keep up with inflation. This makes sure the value of your policy is effectively worth the same at any point in the future. But the premiums also go up over time too to make that happen

What is children’s cover?

Children’s cover is an extra feature you can add to life insurance. It provides financial help if your child becomes seriously ill with a specified illness or dies in an accident. This cover can assist with medical bills, time off work, home modifications, or, in the worst case, funeral costs.

Adding children’s cover gives you peace of mind, knowing your family is protected if the unexpected happens.

What is critical illness cover?

Health issues can disrupt family life at any time. Unfortunately, they become likely the older we get.

Cover for terminal illnesses – those expected to end your life within a defined time – is often included in life insurance policies as standard. But what if a serious illness stops you providing for loved ones for a time?

Adding critical illness cover to your policy means you’re protected if you develop one of the illnesses defined in your policy. It can help with medical bills or time off work while you recover.

Later life: planning ahead to protect your family

As you age, it’s important to think about the safeguards you have in place for your family.

What is over 50s life insurance?

If you’re 50 or older, you might want to think about getting over 50s life cover.

This type of insurance lasts your whole life. It usually pays out a smaller sum than term life cover. For instance, an over 50s policy might provide £10,000 to £20,000 when you die. In contrast, term life might pay out £500,000 to one million pounds. This smaller payout can help your loved ones pay for things like your funeral or any debts you have, like credit card bills.

Put family protection in place today

Life insurance could be a crucial safety net for ensuring your family’s financial security at every stage of life. From starting a family to planning for retirement, the right policy can provide peace of mind and protect your loved ones from financial hardship.

By understanding the different types of cover available and tailoring them to your family’s needs, you can have confidence you’ve put plans in place to safeguard your family’s future.

Key takeaways

• Life insurance provides financial protection to maintain your family’s lifestyle if you die
• Different types of cover may suit you at different life stages, such as meeting a partner, getting a mortgage and having children
• Adding critical illness cover can provide financial support if you’re dealing with a condition you’re likely to recover from
• Adding children’s cover to your policy can provide financial help if your child falls seriously ill or dies in an accident
• As you get older, whole life policies such as over 50s life cover can help loved ones cover debts and fixed costs such as your funeral