The information contained in this article was correct at the time of writing
August 26, 2023
Life Insurance for Family Protection
Losing a loved one can be utterly devastating, both emotionally and financially. Life insurance provides an essential safety net, giving your family financial support if you pass away prematurely.
As a parent, you instinctively want to protect your children and provide for their futures. Sadly, tragedy can strike when we least expect it – around 600 people die each day in the UK. If the unthinkable were to happen, would your family cope financially without your income?
The Vital Role of Life Insurance
Life insurance helps secure your family’s lifestyle if you die unexpectedly early. The policy pays out a lump sum when you pass away, providing funds to cover living expenses, mortgage payments and everyday bills.
For many parents, it brings peace of mind that their family would continue to be financially secure. It helps surviving relatives avoid money struggles on top of grieving their loss.
Tailoring Cover to Match Your Circumstances
The amount of life insurance you need depends on your personal situation, financial commitments and family dependencies. A 30 year old with young kids has very different needs to a retired couple with no mortgage.
As your circumstances change over time, you may need more or less cover. Getting married, having children, taking on a bigger mortgage and other life events are all reasons to review your life insurance needs.
Term life insurance – This provides cover for a fixed period of time, such as 10 to 25 years. It is the most affordable form of life cover for younger families.
Decreasing term insurance – Tailored towards repaying mortgages, the payout reduces each year in line with the outstanding loan. It is often cheaper than level term cover.
Whole-of-life insurance – As the name suggests, this offers lifelong protection right up until you pass away. The premiums are higher as the policy covers your entire life.
Real-Life Policy Examples
To put this into context, here are some typical UK examples of life insurance policies for family protection:
- Sarah, 35 years old, retail manager, married with a 4 year old and a toddler
- Seeks £250,000 level term policy for 20 years to cover the mortgage plus family’s living costs
- Annual premium around £16 per month
- Michael, 52 years old, accountant, married with 3 teenage children
- Requires £150,000 decreasing term policy to repay outstanding mortgage
- Over 20 years the premium starts at £19 per month
- Elizabeth, 28 years old, marketing executive, single
- Needs £50,000 level term policy for 25 years as financial safety net for close family
- Annual premium approximately £7 per month
As you can see, UK life insurance can be very competitively priced, making it an affordable way to protect your loved ones. The exact policy terms depend on personal factors like age, health, lifestyle and family medical history.
Choosing the Right Life Insurance
With different types of cover and varying policy conditions, picking the optimal life insurance can feel complicated. The most suitable option comes down to your distinct needs and priorities.
Here are five tips for choosing optimal cover:
- Define how much money your family would need if you passed away today. Factor in debts, bills, funeral costs and income replacement.
- Pick an appropriate policy duration that protects your dependents until they can financially support themselves. Term lengths often match mortgages.
- Compare quotes from multiple providers to find the best value cover for your situation from reliable insurers. An adviser can explain the differences.
- Consider including critical illness cover to receive a payout if you get diagnosed with a specified serious disease.
- Frequently review your policy so it adapts as your obligations and family circumstances change. You may be able to adjust your existing cover.
Making Life Insurance Claims
One topic people understandably don’t want to think about is what happens when a policy pays out. However, it’s useful to understand how UK life insurance claims work, so your family knows what to expect.
In the event of your untimely death, your nominated beneficiaries simply need to contact the insurer and submit evidence to verify what happened.
The claim decision often takes just 1-2 weeks. Once approved, your policy’s lump sum payout gets issued to your designated beneficiaries, tax-free.
Some policies include valuable support services for dealing with bereavement – such as grief counselling, legal and financial advice.
Bringing up the Topic with Loved Ones
Broaching conversations about life insurance may feel uncomfortable at first. But it spares relatives the pain of financial concerns down the line.
Reassure them that you get cover solely for their wellbeing – for example, to pay off the mortgage so they can remain in the family home. Emphasise it’s an act of love to protect their future.
Explain the simple, no-fuss claims process too. Making a claim seems trivial compared to the tragic event of losing someone. But knowing what to expect removes an extra layer of uncertainty.
You may find it helpful to discuss life insurance with other family members present, so everything is out in the open.
Take Action for Future Peace of Mind
While no amount of money can replace someone’s life, a payout can ease your family’s financial difficulties. Having life cover in place lets you focus on what matters most – enjoying precious time together, rather than worrying about money.
Even if you consider yourself young and healthy, tragedy can strike when we least expect it. Around half of UK protection policies pay out for people under 60.
Compare life insurance quotes online in just a few minutes. Or for personalised advice, contact an independent broker specialising in family protection policies. By getting covered now, you secure your loved ones’ futures.
