Why every parent should consider life insurance
As soon as you become a parent, life changes. Probably for the first time, it's not all about you – there are other people to consider too. It's only natural to worry about how your family would cope if you were to die and you’d want to protect them in any way you can. This is where life insurance comes in. Be you a breadwinner or full-time parent, insuring your life could be the decision that could make all the difference when it really matters.
If you question whether life insurance is really worth it, think of it as something you hope you'll never need, but knowing it's there means you can have peace of mind. Having life insurance lets you get on with your life knowing that if the unthinkable happened to you, your family would have a bit of help in the months that followed.
Think beyond the breadwinner
It makes good financial sense for the main wage earner in the family to be covered, and this is often the case with life cover included in certain employee benefits. However the importance of life insurance for mums and dads who stay at home to look after the children shouldn’t be overlooked. If they were to die, would the surviving parent have to give up work to look after the kids and the home? Or would they be faced with high childcare costs that didn't come out of the household budget before?
How and when a life insurance payout could help
If the unthinkable ever happened, that would be distressing enough for your partner or family – to be faced with money worries on top of that would make a tough time even tougher. And if you have children, the financial pressures could be significant – back in 2016 the estimated cost of raising one child in the UK was a whopping £230,000 and prices have risen since then. So, it’s not hard to see why a life insurance payout could be a financial lifeline for your loved ones, both in the short term and over the years to come.
In the short term
In the first few weeks there would be so much to think about. Your partner would have a lot to cope with including taking care of the children, so not having to think about money at such a difficult time would be some comfort.
In the medium term
As life goes on, your family may face ups and down when it comes to their income. A life insurance payout could be used to pay off the mortgage or keep up with the monthly repayments, as well as clearing any other debts and ensuring there's enough money to cover everyday expenses like food, utility bills, and clothes.
And don't forget the cost of childcare and education – even if that's just paying for school uniforms, equipment and school trips. A little bit left over for a family holiday would also be very welcome.
In the long term
As the years go by and your family grows up, wouldn't it be nice to know that they can get on in life in some part, thanks to the financial security that you put in place for them? You can rest assured that money worries might be made a little less worrying thanks to the earlier provisions put in place by yourself.
Working out how much life cover you need
The question is how much life cover do you actually need? That will depend on you, your finances and your family’s dynamic. A good starting point is to take the following things into account:
- Your age now
- Your children’s age - and how long you’d like to support them
- Your home - the amount owing on your mortgage or your monthly rent
- Your monthly outgoings – from food shopping and child care to memberships and subscriptions
- Your debts – including household bills, loans and credit cards
- Your household income - salaries and other sources of regular income, such as dividends
- Your safety net - any savings or existing life cover
You’ll also need to think about how long you’d like to be covered for - for example, the years your children are at school or the time remaining on your mortgage – and what you can comfortably afford to pay in premiums. Remember, it’s better to have some cover in place to protect your family than none, so be realistic about how much you can achieve.