Making Protection a Family Matter

Darren Shepherd
April 30, 2020
No matter what age you are, life insurance is something you should seriously think about including in your financial plan.
 
Whether you are new parents, parents with grown‐up children, or you’re looking after your own parents, life insurance can help secure your family’s financial stability, and protect against life’s unexpected and unwelcome events like death, accident or critical illness.
 
The funds from a policy could be used to:
  • Pay off a mortgage or other outstanding debt
  • Cover loss of income
  • Help a family maintain its lifestyle
  • Cover childcare fees and provide extra help with household costs
  • Pay for funeral costs
  • Help in reducing Inheritance Tax on your estate, if the policy is in Trust
Deciding how much cover you need
 
The amount of cover that’s right for your family depends on your personal circumstances. Many families take out enough to repay the balance outstanding on their mortgage. It also makes sense to think about your day‐to‐day lifestyle and the amount of money your family would need to maintain it. So, that could include household bills and regular expenses, current or future school fees, and any loans outstanding.
 
As a rough guide, many experts would suggest the amount of cover families generally need is roughly 10 times the annual income of the breadwinner.
 
And it’s important not to forget the value of a stay‐at‐home parent. For many households, the list of tasks they perform includes childcare, cleaning, cooking, laundry, taxi service, shopping and much more besides. If these services had to be paid for, then the bill could be many thousands of pounds a year.
 
Tailoring cover to meet your needs
 
When you take out a protection policy, you will have the choice between a term policy and a whole‐of‐life policy. Both types of contract have their advantages and can be used to meet different financial objectives.
 
The most basic difference between the two types of cover is the period of time each contract covers. Term insurance provides protection for a set number of years, whilst a whole‐of‐life policy, as the name suggests, lasts for the remaining life of the person insured.
 
Term policies can be taken for just a few years, or for up to 40 years. This means that you can choose the length of policy you need, so for example you can provide cover for your family whilst your children are growing up.
 
Insurance policies can protect your finances, your home and your family in the event of incapacity, a serious illness, an accident or death.
 
As with all insurance policies, conditions and exclusions will apply.
 
 

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