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!
We understand that every family is different and 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.
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 coverm you start paying monthly premiums to your provider. It's important to keep up with these payments in order to stay covered.
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How do I know what insurance my family needs?
Here are some things you should consider when choosing the best family life insurance plan for you:
What are your family’s monthly outgoings? In other words, how much regular income does your family need to live on? Making sure you understand this is key to deciding how much cover you need.
How will your financial needs change over time? For example, for how long will you need to be able to support your children?
Do you have a mortgage or any other big debts? If so, perhaps a life insurance policy that will pay out a lump sum would be well suited, to help your loved ones with this cost.
Have you built up enough savings to cover your family’s financial needs should you or a partner lose an income due to illness, or sadly pass away? And, perhaps the more important question, would you want to use them for this purpose? If, for example, you’re saving to give your child their dream wedding, or to help them with their deposit on a house, then insurance cover may be key to making these ambitions a reality, should the worst happen.
Once you know what you need, you’ll want to work out what your budget for insurance is and therefore what type of cover you can afford. Family life insurance rates really vary and if money is a concern, there are some budget-friendly insurance plan options available that can still provide valuable protection for you and your family.
While there may be similarities, every family is individual and has their own distinctive insurance needs – so getting support from experts who can help you understand these needs, and the best policies and insurers to meet them, is a very good idea. To chat through your options, why not speak to an adviser today.
Which type of life insurance is best for families?
Typical life insurance policies are designed to pay out a lump sum of tax-free money in the unfortunate event of your death. It is more black and white than many types of insurance, because in a nutshell, if you pass away within the term of the policy, then your loved ones will receive a payout.
Many families opt for this type of policy, often with the intention of using the one-off payout to cover the cost of their mortgage. There are quite a few different types of life insurance, including term life insurance and whole of life cover.
Whole life insurance - Covers you for the rest of your life, paying out a cash lump sum regardless of when your die. In addition, your premium costs and pay-out value are fixed throughout the policy.
Term life insurance - Unlike whole life cover, term life policies only cover you for a set period of time. The policy pays out providing you die within the policy term. If you survive the term, the policy expires and you won't receive any money for the premiums paid previously.
Term life insurance has three levels of cover :
Level term - Pay-out value and premium costs (guaranteed premiums) are fixed throughout the term.
Decreasing term - Tyically used to cover large payments like a mortgage. The pay-out value decreases over the policy term, usually by a fixed percentage agreed at the policy outset.
Increasing term - The pay-out value increases over time to help protect the value from inflation.
If you’re married or have a long-term partner, you might want to consider a joint life insurance policy. This provides a lump sum of money to a surviving partner should the other partner pass away. Joint policies are designed to look after individuals suddenly burdened with financial commitments that were previously dependent on more than one income. Many couples opt for joint cover as it can be cheaper than purchasing seperate policies.
Two other options are income protection insurance and critical illness cover -check out the differences between these products here - Which is better: critical illness or income protection insurance?
In short, critical illness cover is an insurance policy that pays you a lump sum of (tax-free) money if you fall ill with one of a number of specified serious illnesses, whereas income protection cover will replace a portion of your regular income if you’re unable to work.
Critical illness and income protection insurance are both very valuable products, and which is best suited to you depends on your family’s individual circumstances and insurance needs. 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.
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 payout from your policy can help your family cover future finances such as:
Living exspenses
Mortgage repayments
Funeral costs
Outstanding debts
Medical bills
When applying for a life cover, your insuer will typically ask you some basic health and lifestyle questions.
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 can help you work out which type of insurance and which insurer is best suited to your needs. Call 01392 241 850 to speak to one of our insurance experts, who can guide you through the process and support you in choosing the best cover for you and your loved ones.
