It’s not nice at all to think about the risks facing people we love, or what would happen to them if we were no longer around, but the reality is that we really can’t afford not to. We need to face these risks head-on, no matter how difficult that might be. Life is unpredictable, and it’s the unpredictability that makes having a plan, which ensures the financial protection for your whole family, so fundamental. In short, it can be a huge weight off your mind!
Life is unpredictable, so having a plan, which helps to ensures the financial protection for your whole family, is fundamental. In short, it can be a huge weight off your mind!
Every family is different, and we feel strongly that your insurance plan should match your specific concerns and your family’s unique set of needs. This guide will help you to understand the options available to you and how you can decide which may be the best fit.
Talk to a life insurance expert today...
What is family life insurance?
Family life insurance cover is all about protecting what matters most to you, from your family’s well-being to their financial security, should the worst come to pass. However, family life insurance is a rather broad term, used to refer to lots of different types of insurance policies, so it's really important to understand the options and consider which is best for you and your loved ones.
This involves not only thinking about what would happen should you or your spouse sadly pass away, but also if one of you fell seriously ill and became unable to work. Products like critical illness cover and income protection insurance can help here.
Like any type of insurance, once you take out cover you start paying monthly premiums to your provider. It's important to keep up with these payments in order to stay covered.
Benefits of Family Life Insurance
Family life insurance offers a host of benefits, such as:
Financial protection - Your family receives a cash lump sum or a monthly/annual benefit should you die. This helps ensure that they are protected from the loss of your income.
Peace of Mind - Know that your family and/or loved ones have protection in place to help them remain financially secure. This could allow you all to focus on other aspects of life without worrying about the future.
Lifestyle Protection - Can help protect your family’s lifestyle and standard of living. It may provide money for ongoing expenses, such as household bills, childcare costs, education fees, or other major expenses.
Support for any children - Could provide an income to your dependents, such as children. It may also leave a legacy, helping them buy their own home.
Debt Protection - Could protect your family from any debts you may have left behind. This might include mortgage payments, loan repayments or other financial obligations.
Flexibility - Can offer flexibility, allowing you to tailor it to fit your needs and budget.
Disadvantages of Family Life Insurance
Whilst there are many benefits to family life insurance, it is important to consider the disadvantages as well:
Term cover - family life insurance is often bought on a term basis, meaning there is a start and end date. If a claim is not made during that time window (i.e, you survive the policy), then you will not be entitled to a payout or a refund for the premiums you have paid so far.
Inflation - your sum assured may not keep up with inflation levels, meaning that whilst it might still help your family if you pass away, they may not be able to live at the same standard as when you were alive. This can, however, be combatted by purchasing an increasing policy. Be sure to check your documents or ask your adviser before purchasing.
How do I know what insurance my family needs?
Life insurance policies can work differently from each other as well as how much they are likely to cost you. There are two main types of life insurance - Whole of life & term life insurance and though they sound similar, what they offer is different.
Whole of life insurance
As the name suggests, whole of life insurance (sometimes known as life assurance) covers you for the remainder of your life - just as long as you keep paying your premiums. These policies are more expensive than most, but ensures your family of a guaranteed pay-out, no matter when you die.
There are two main types of whole life insurance:
Standard whole life cover
Standard whole of life insurance is the version that Cavendish Online offers. This product has no investment value, you simply pick how much you would like to be assured for and pay your monthly premiums. This is the simplest form of whole life cover. Your premiums can be guaranteed or reviewable, so discuss your preference with an adviser first.
To talk to a Cavendish Online adviser about whole of life cover, please call us on:
01392 436193
(Monday to Thursday 9am – 5.30pm, Friday 9am – 5pm)
Unit-Linked whole life cover
This is an investment based product where part of your premium goes towards insuring your life, and part is invested. Unfortunately, Cavendish Online is not authorised to discuss this product with you.
Certain whole of life insurance policies are designed to be cheaper such as over 50's life insurance. Life insurance costs increase as you grow older. An over 50's policy provides protection at a more affordable cost. The downside to this is that the pay-out will be a lot smaller than what you would expect from a standard (fully medically underwritten) whole of life insurance policy.
When we eventually die, it'll already be a difficult time for our loved ones, but reducing any financial burdens facing your family can make things a little easier.
Please note: The insurance products offered by Cavendish Online have no cash-in value at any time. If you stop paying your premiums your cover will stop, your policy will end, and you will receive no benefit. If you have not claimed before the end of your chosen policy term, the policy will end, and no benefit will be paid.
If you are facing financial difficulties and can no longer afford your premiums, please contact your insurer as soon as possible to stop the plan from lapsing automatically. They may have a scheme that allows you to keep the cover.
Term life insurance
As mentioned previously, term life insurance covers you for a specific length of time - referred to as a 'term'. This type is usually cheaper than whole of life insurance, but you don't have the added comfort of a guaranteed pay-out.
For example, if you take out a policy that covers you for 20 years; if you die 21 years later, your family won't receive a pay-out as the policy will have already expired.
Term life insurance is usually taken out to cover outstanding finances like a loan or mortgage. When you die your family can pay these off using the lump sum payout from the policy. Term life insurance can be sorted into 3 different types of cover - level term, increasing term & decreasing term.
Level term life insurance - Your family receives the same pay-out amount, whether you die in the first 5 years of your policy or 20 years into it. The downside to this is that the payout amount is not protected from inflation. This means that the value of the policy - in terms of the cost of living, may be worth less than when you originally bought it.
Increasing term life insurance (sometimes known as ‘Indexed’ or ‘Index Linked’ cover) - Your insurer will increase the value of your pay-out over time, to protect it from inflation. This means that when you die, your loved ones receive more money than when you first began the policy to keep up with the cost of living. Though the pay-out increases, so too might the cost of your premiums.
Decreasing term life insurance - This type of cover is designed to be taken out alongside a debt or loan, such as a mortgage. As you pay off outstanding payments, this policy pay-out decreases. If you die before paying off these payments, your family can use the policy pay-out to cover the amount owed should they wish to.
Joint life insurance
Joint life insurance protects both you and your partner under a single policy. Should either of you die during the policy term, the surviving member receives a pay-out designed to fill the financial void left by the other. It's usually cheaper than taking out two (separate) single policies and is easier to manage.
This is especially beneficial if you have children as the pay-out can be used to ensure they are well looked after when you are no longer around. This type of policy works in two ways - joint life first death & joint life second death.
As it would suggest, first death means the policy only pays out after the first policyholder's death. This also means that the surviving family member will need to buy further coverage should they require it. With a joint life second death policy, the policy only pays out once both family members die, with the pay-out going to your loved ones.
Alternatives to family life insurance
If a life insurance policy isn't the right fit for you, there are a few other options available. These include:
Family income benefit
Family income benefit could help replace your income, by paying out in monthly or annual instalments, making life easier for surviving family members. The benefit payments may cover a range of costs, including mortgage payments, rent, utility bills, education fees, and other regular outgoings.
Some people may find the instalments easier to use in their budget than a large lump sum. The premiums for this plan remain fixed for the lifetime of the policy.
Critical illness cover
Critical illness cover can be taken out on its own or as an add-on to life insurance. It pays out if you become seriously ill or injured and are unable to work.
Examples can include - heart attacks, stroke, or cancer, and each provider has their own terms & conditions, so be sure to compare plans to make sure you get the plan you want. The payment could be used to cover medical expenses and other costs associated with your illness.
Premiums for critical illness cover usually remain the same, unless you have opted for an increasing plan, in which case the sum assured and premiums will increase over time.
Income protection
Income protection insurance may provide financial security if you’re unable to work due to an illness or accident. It pays a regular income, if your claim is eligible, directly into your bank account on a monthly basis.
This could cover living costs and other bills while you’re off work, so you can focus on your health Income protection premiums are fixed unless you have opted for an increasing plan.
This policy usually has a 'deferred period' (waiting period) before it starts to pay out. You can choose how long you wait and keep it in time with your sick pay period, i.e. one month, six months, 12 months etc.
Death in service benefit
Death in service cover is typically offered to employees by their employer. It’s designed to support your family in the event of your death, whilst employed by the same company. This type of policy may pay a lump sum to your family and/or loved ones, typically between two and four times your annual salary.
To help you make the right choice for you and your family, you can call 01392 241 850 to speak to one of our insurance specialists.
Who needs family life insurance?
Hindsight is a wonderful thing but none of us can predict when we will die exactly. That’s why it may be beneficial to have a family life insurance plan in place - should the worst happen. There are a number of people who can benefit from buying family life insurance such as:
Young families - Nobody wants to leave their spouse or partner to raise their children alone. Family life insurance can provide the necessary funds to pay for childcare and everyday living expenses.
Older families - As our children get older, things become more expensive. Even if you’re no longer around you can still help towards things such as driving lessons, their first car, or even university fees.
Couples & spouses - Consider the impact on your household if one of you were to pass away. Life insurance can help ensure your partner is supported when you die. You can get cover for both of, either as a joint policy or as individuals via two single policies.
Stay-at-home parents - Even if a stay-at-home parent does not bring in a salary, their contributions to the family are invaluable. Family life insurance can help cover the costs of childcare, household expenses, and other needs should something happen to the parent.
Single parents - Whether you have young or older children, as a single parent a pay-out can secure your children’s future. This money can support them through to their next chapter in life - even starting a family of their own.
Homeowners - None of us wants to leave our family struggling to pay off an outstanding mortgage balance. With policies like decreasing term life insurance (typically taken out by those wanting to cover a repayment mortgage), you can ensure the remaining mortgage is paid for upon your death.
Why should I buy a family life insurance policy?
As a parent, it’s understandable to worry about how your family would cope if you were to fall ill. In particular, the loss of income that can be caused by illness or injury can be a big concern. The good news is that there are insurance cover options available to you that can prevent your family from being left short-changed by ill-fortune, and therefore offer great peace of mind.
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-to-day living costs
Children’s school or university fees
Costs for a funeral - in line with your wishes
When applying for a life cover, your insurer will typically ask you some basic health and lifestyle questions.
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. Speak to the Cavendish team over the phone or on live chat, and we’ll be able to give you all the information you need to help you decide what’s best for you.
What is the cost of family life insurance?
The overall cost of life insurance depends on a few things, including:
The type of life policy and length (the policy term).
The size of the policy pay-out (the sum assured).
Your age - as you get older, the cost of life insurance rises.
Your health - if you have health problems or pre-existing conditions, it may increase your premiums.
Your lifestyle - if you smoke or have hazardous hobbies or a dangerous occupation, you may pay more for your policy to account for the added risk.
How can I keep policy costs down?
There are a few ways in which you can keep the cost of your policy down, like:
Getting cover when you are young - life insurance becomes more expensive the older you get, so bear in mind that any delay in purchasing is likely to lead to higher premiums.
Quit smoking - we all know smoking is bad for your health, but if you need another incentive to quit, it can reduce your monthly life insurance premium costs.
Consider a joint life insurance policy - if you and your significant other shares an income, you may find it cheaper to take out a joint policy, instead of two single policies. Not only is it cheaper, but it may also be easier to manage.
What is children’s critical illness cover?
Sleepless nights and worry-filled days are unfortunately common symptoms of having a child; the mere thought of our children coming into harm’s way is enough to incite heart palpitations! Nonetheless, planning ahead for the worst-case scenarios can minimise the impact of any potential ordeal.
If your child was to fall seriously ill, the family finances should be the last thing on your mind, but it’s always surprising just how quickly the costs can pile up – from taking time off work to the funding of specialist care, it can become overbearing. However, children’s critical illness cover can help alleviate this burden and offer much-needed support.
This insurance will mean that if your child falls ill, or develops a serious condition covered by the particular policy, you will receive a lump sum payout. Not only can this ease stress and give you one less thing to worry about, but it can also give you the flexibility needed to be there for your child during a challenging time.
How can I buy the right insurance policy for me and my family?
While not a particularly jolly topic, we hope this guide has provided some reassurance that there are lots of insurance options available to families, which can provide much-needed support during difficult times. But we have only really scratched the surface; families are unique and come in all shapes and sizes, so there is no one size fits all answer.
At Cavendish Online, we understand the importance of getting life cover arranged quickly. With our online process you could have life cover arranged in as little as 30 minutes. Plus, it removes any hassle and makes getting life insurance nice and easy. That way, you can have peace of mind, knowing your loved ones are financially protected should the worst happen.
We offer 3 routes for getting a quote for family life insurance:
Route 1 - Quote & apply online
Route 1 is the fastest and most cost-efficient way to buy life insurance online.Our Quote and Apply process takes less than 15 minutes, and you could be covered within 30 minutes. The whole process is managed by you, so you can make all the decisions that are important to you.
Select this route if you:
Know exactly what you need
Are generally in good health
Are confident to write your policy in trust
Route 2
Quote & apply with guidance
Our life insurance experts can help you to decide what you'll need and can guide you through your quote. With their guidance you could be covered within 30 minutes.
Select this route if you:
- Need help from an expert to help you make an informed decision
- Are generally in good health or have minor health issues
01392 241 850
(Monday to Friday, 10am to 6.30pm)
Request a callback
Route 3
Quote & apply with advice
Recommended for those with medical disclosures or hazardous occupations, we can help you find the most suitable and affordable policy that best suit your needs.
Select this route if you:
- Would like an adviser to recommend life insurance tailored to your circumstances
- Currently have or previously have had a medical condition/s whether well managed or not
01392 436 193
(Monday to Friday, 9am to 5.30pm)
Request a callback
