Life Insurance for Families – Forbes Advisor UK


Life insurance offers the peace of mind that your partner and / or children would have a financial safety net to fall back on if you were no longer around.

But what type of policy should you buy and how does family life insurance work? We tell you everything you need to know.

What is family life insurance?

Family life insurance is an insurance policy that will pay a tax-free lump sum to your family if you die during the “term” of the policy.

The term is the term of the policy if no claims are made. You choose the duration of the mandate according to your family’s situation.

If a claim is made on the policy, the lump sum payment can be used as your family wishes. Common uses include helping with mortgage payments, paying off other debts, or paying for living expenses, household bills, and education costs.

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How does family life insurance work?

With a life insurance policy, you pay a regular monthly or annual premium to a life insurance provider. If you die during the term of the policy, then the insurer pays a pre-agreed amount of money – known as the “sum insured” – to your family.

Having enough of this protection in place ensures that your family would not have financial hardship if you were no longer around to support them.

Who needs family life insurance?

Family life insurance can benefit a wide range of people, including:

  • couples who bought a house together
  • couples who got married
  • those who had a baby
  • families with older children
  • single parents.

How much does family life insurance cost?

Life insurance premiums can start from £ 5 per month – which can be a small price to pay for financial protection for your loved ones.

However, your premiums will depend on factors such as your age, health, and lifestyle – including whether you smoke – your occupation, the amount of coverage you need, and the length of the policy.

Keep in mind that the younger you are when you purchase coverage, the lower your premiums will be.

If you have a risky job – like someone working at heights or on an oil rig – you will tend to pay more. And as you might expect, higher sums insured and longer policy terms will also increase premiums.

What type of family life insurance is right for me?

There are different types of family life insurance policies, so you’ll need to figure out which one is right for you. You can choose from:

  • level term insurance: where the amount of coverage and your premiums stay the same for the duration of the contract
  • decreasing term insurance: where the repayment amount decreases over the life of the policy – this can be a good option if you want sufficient coverage to pay off a repayment mortgage, for example, where the amount owed gradually decreases over time. The premiums will stay the same for the life of the policy, but the total amount you pay will be less than an equivalent term policy.
  • whole life insurance: where the policy is guaranteed to pay no matter when you die, rather than only if you die during the specified term of the policy. This is usually the most expensive type of life insurance because a claim is guaranteed at some point.

What else should I consider?

In addition to the type of life insurance policy, you will also need to consider the following:

  • payment size: At a minimum, you will need sufficient coverage to pay off your debts, including your mortgage, credit card and loan balances, as well as to cover bills and daily living expenses
  • duration of the policy: You will also need to take into account the execution time of the policy. It could be until you’ve paid off your mortgage, or until your kids are old enough to leave home and become financially independent.
  • single or mixed blanket: a single life insurance policy covers only one adult, so a couple should purchase two separate policies to make sure both are covered. A joint life insurance policy will cover two people in a relationship, but it also means that there is only one payment – usually when the first person dies, in which case the survivor no longer has any coverage. square. Joint policies are generally less expensive than two single policies because the total amount of protection provided is less.

When should I review my family life insurance?

Once you have purchased life insurance, it is important to check regularly that it offers sufficient coverage, especially after major life events such as having another child or moving and taking out a larger mortgage.

In these situations, you will likely need to increase your level of coverage, which can lead to higher premiums, but it will ensure that your family remains properly protected.

Are there other ways to protect my family?

An alternative to family life insurance is the family income allowance. This is a cheaper type of protection that pays a series of small, monthly tax-free amounts to your family if you are no longer around, in an effort to replace lost income. It can be a good alternative to life insurance because your family won’t need to manage or invest a lump sum.

The duration of a family allowance policy can often be programmed to cover the time that children are in school or until they become financially independent – or even longer if you prefer.

Critical Illness Considerations

It may also be worth considering critical illness coverage. This type of insurance will pay a tax-free lump sum if you are diagnosed with a specific illness or health problem listed on the policy. Some include coverage if you are seriously injured in an accident and disabled as a result.

Many life insurance policies allow you to add critical illness coverage for an additional fee, or you can purchase a separate “stand-alone” policy. If you have a combined life and critical illness insurance policy, you will usually only receive one payment – either when you are diagnosed with illness or when you die. Some insurers also offer critical illness coverage for children.

Another consideration worth considering is income protection insurance, which will pay you a regular income if you cannot work due to illness or injury. In some cases, it will also cover you in the event of dismissal.

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Adapt the coverage to your needs and gain financial security for your loved ones



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