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8.7.15

Does Your Life Insurance Cover Your Whole Family?

Did you know that in 2014 Aegon published data showing that almost half of all mothers had never discussed what would happen if they passed away? And Barclays found that nearly 2 thirds of UK adults didn’t have any Life Insurance at all! That’s worrying news, but with the right knowledge you’ll realise that Life Insurance is a great way of covering your whole family from financial distress.
What’s the best way to get Life Insurance to cover the whole family?
Getting Life Insurance or financial advice from a broker is strongly advised. You’ll want to make sure you’re adequately covered and a simple price comparison website won’t tell you which policy is best for you. You need to think about what, who and for how long you want the cover so that you’ve got a strong idea of what you need. Buying Life Insurance early on is a good idea too, it means that you can keep the price down. The older you are when you start Life Insurance the more it will cost.


Is Life Insurance the only option?
There are lots of options out there other than just a plain Life Insurance policy. Family Income Benefit, for example, will pay out monthly to your family over a specified period of time, while Income Protection will pay out monthly payments to you if you were unable to work due to illness or injury. Life Insurance itself comes in different types: a Whole of Life policy will cover you for the entirety of your life, whereas a Term policy will only cover you for a specific amount of time.
How much does a premium cost for Life Insurance?
We ran a quote with AIG and found that the monthly premium costs £147.08 (just for the father) for every insurance needed. This was based on a middle class couple with 2 kids and a dog: your average picture perfect, healthy family.
Seem like a lot of money? It is. That figure pays for cover that allows 10k each for funeral expenses, 250k to cover their average mortgage over the average mortgage length and Critical Illness Cover, £1500 Income Protection to make sure the father has some income if he couldn’t work, and £1500 Family Income Benefit to cover the child care costs if the parents were unable to do so.
This could be greatly lowered depending on your own circumstances, and once broken down to the individual policies of income protection, family income benefit etc. you can see how the very basics you need could be drastically less expensive.
This handy Life Insurance calculator from Legal & General can give you a good idea how much cover you need http://www.legalandgeneral.com/life-cover/confused-about-life-cover/life-insurance-cover-calculator/
NOTE: All quotes and figures are accurate of 03/07/2015 but prices will naturally change over time. Quote based on 2 adults aged 32, non-smokers, no medical conditions, looking for Whole of Life Insurance, Critical Illness Cover for 25 years, Income Protection for 65 years and Family Income Benefit for 65 years.
Will Life Insurance cover the cost of my funeral AND support my family in monthly payments?
Yes, it can cover everything you need it to cover! You only need to ask for the insurance with a broker like Active Brokers so that you can find out how much cover you can get for what price. A general Life Insurance policy will pay out a lump sum of money – this could be used to pay for your funeral (writing a Will is a great way of making sure the money goes where you want it to go) and you can also arrange to have your Life Insurance paid out in monthly ‘wages’ to your family: Family Income Benefit will also do this for you. Organise for both to happen and voila, you’re covered for what you wanted.
3 Tips for Getting the Best Possible Life Insurance Policy for the Lowest Price
  1. Avoid banks for insurance – banks are known the charge much higher prices!
  2. Longer deferred periods – important to think about if you’re looking at Income Protection: how long could you manage without an income once you can’t work?
  3. Use a brokerage like Active Brokers – Using a broker will give you expert advice as well as the best price for your Life Insurance.


(2012 data) Barclays research shows nearly two thirds of UK adults do not have a policy in place http://www.thechildrensmutual.co.uk/family-articles/insurance/almost-two-thirds-of-uk-adults-have-no-life-insurance/

(2013/2014 data) Aegon found that nearly half of all mothers had never discussed with their family what would happen if they died https://www.aegon.co.uk/news/media-centre/pressreleases/aegon-protection-report.html