Family life insurance is a broad term, but as insurance products go, it generally refers to either ‘family income benefit’ or ‘term’ life insurance.
If you have dependents - such as children who are still at school, or a partner who relies on your income, life insurance can provide for them if you die. Such a loss can have a massive impact on your remaining family and their quality of life, so the last thing you’d want is to leave them with a financial burden.
With that in mind, if you’re a parent and you or your partner who’s a dependent (who isn’t a financial contributor to the household) were to pass away, you may want to consider if just one of you could realistically maintain the same working schedule after the loss of your partner - with considerations to the cost of childcare, maintaining the household and other daily family commitments. That’s why it’s important to always consider covering both partners with life insurance policies, either individually or both on a joint policy.
‘Family income benefit' provides a regular tax-free income to your family in the event of your death. Essentially, it acts to replace your income to protect the finances of your loved ones if you were to die within the period of the policy. Unlike ‘term’ insurance (which pays out a lump sum), family income benefit pays out incrementally, as if you were earning a monthly wage for a set amount of time.
If you’re interested in taking out a family income benefit policy, we’ll need to know how much income you’d like your family to receive (and for how long) so we can calculate the cost of the cover.
‘Term’ life insurance comes in two types and can be taken out either as an ‘individual’ or on a ‘joint’ policy:
There’s no right or wrong type of cover for your family. Cover should be chosen based on understanding the options available and making an informed choice for your family and circumstances, both now and how they may likely be in the future.
The payout from a life insurance policy could help to cover some or all of your financial obligations if you were to suddenly die. For example, a two-parent family with 2 children might have a combined annual income of £35,000 and monthly outgoings of £2,000.
If one parent took out a policy and passed away, their family could receive a payout up to an agreed limit that could cover the household finances over a period of time.
The amount you want to secure and the premiums you’re willing to pay are up to you (and can be surprisingly affordable) making life insurance accessible to virtually all families.
The family members who you choose to benefit from your life insurance policy can use the payout however they like. Typically, it’s usually spent on things like:
Repayments on a mortgage, or even clearing any outstanding mortgage
Replacing your wages, for day-today living costs
Children’s school or university fees
Costs for a funeral - in line with your wishes.
Taking out life insurance for your family gives them the freedom to continue to thrive in life, whatever they may need.
You may already have a life insurance policy in place but haven’t looked at it for some time. It’s certainly worth having a review to see if it still fits your needs and speaking with us to see if we could also save you some money.