Conflicted on Taking Out Life Insurance?

By Vicki Coleman

When you become a parent and/or a homeowner, you have newfound responsibilities. Life can shift up a gear and your outlook may change towards ensuring that you’re doing everything to protect your family.

But there’s one area that parents and homeowners both overlook when looking to protect what is theirs: life insurance.

The latest data shows[1] that more than a third of parents in the UK don't have any form of life insurance, while two-fifths of homeowners[2] have not yet taken out a policy to protect their property in the event of their death.

Why is life insurance still not a priority purchase?

There could be any number of reasons for this. Lots of parents and homeowners are either short on time, short on money, or both. As a result, it naturally falls down the list of priorities.

There are also a number of common misunderstandings around life insurance which may play a part in why it’s sometimes sidelined.

Some people believe, rightly or wrongly, that they have other financial arrangements in place that will cover their family should anything happen to them. Others believe life insurance to be too expensive for the risk that it’s providing protection against.

Speaking of which, many parents and homeowners don’t want to have to think about the prospect of them dying in the first place. It’s something they can’t imagine.

Unfortunately, however, it’s not unimaginable. But the discussion around death for the purpose of life insurance can be short and sweet.

Our team is trained in keeping the conversation moving, while capturing all the details necessary to provide you with personalised quotes from leading suppliers.

What does life insurance cover?

The boring answer is it depends on the life insurance policy that you take out. But it’s entirely possible to take out cover which will pay off the mortgage and ensure your family can live free from any immediate financial pressures.

If you have young children, you don’t need reminding how much it costs to provide for them – there’s childcare costs, school uniforms, weekend activities.. the list goes on. If you were to sit down and tot it all up, you’d probably be shocked at the sum of being a parent.

It obviously goes without saying that you don’t want your children to have to lose out in the event of you dying.

A life insurance policy can help:

  • Make sure outstanding debt like a mortgage is manageable.
  • Minimise stress during an already difficult time.
  • Let your family maintain their lifestyle.

When taking out your cover, you will have different options on the size of the payout. Make sure you take the lifestyle of your family into account. You may want to get multiple quotes to weigh up the cover against the cost in insurance premiums.

What types of insurance products are available?

There’s no shortage of life insurance products on the market – it’s about finding one that matches your family’s needs and circumstances.

Let’s take a look at your options:

Decreasing term insurance

Designed specifically for mortgages, a decreasing term policy provides cover for the length of your mortgage, with the payout tapering off over time to reflect the outstanding debt. This product would not work if you have an interest-only mortgage.

Level term life insurance

This kind of policy covers you for a set amount of time such as five, ten or 25 years. You might want to match the term with the length of the mortgage. If you die during the term, your family will receive a payout that can be used to pay off the mortgage. If the mortgage has been paid off by time, the money can be used to cover living expenses.

Joint life insurance

Joint life insurance covers both you and your partner. If either of you dies during the term, the surviving partner receives a lump sum payout which can be used to pay off the mortgage or support family expenses. The policy ends at the time of the payout, so you will need to take out further cover if you are the surviving partner.

Single life insurance

If you are a solo parent, you have the option of taking out single life insurance which covers just one person and provides a lump sum payout to named beneficiaries if the policyholder dies during the term.

Critical illness cover

Some insurers offer critical illness cover as an add-on to your policy that pays out if you become too ill or disabled to work. It can also be taken out as a standalone policy. It covers certain conditions, providing you and your family with some financial support on diagnosis of your condition – for example, you may need to take time off work or pay medical expenses. You can also add on children's cover, which pays out if your child is diagnosed with a serious condition.

When should you take out life insurance?

There’s no perfect time to take out life insurance cover. However, if you get cover early, your premiums will be fixed at that lower rate – even as you get older and your health changes.

If you’re taking out a mortgage, your lenders may insist on you taking out a life insurance policy before they allow you to borrow the money. But it’s not compulsory and you don’t have to renew the policy for the length of the mortgage.

However, many homeowners continue to pay for life insurance cover anyway, retaining the peace of mind that comes with the product.

When you become a parent, that sense of wanting to protect the people you would leave behind should you die becomes even stronger.

There’s no harm in obtaining some quotes to understand how much you would have to pay for a policy designed to protect your family.

At QuoteSearch, we’re independent and FCA regulated, so you can proceed with trust. Even if you don’t follow through on a quote, your information will be securely stored, and is never shared without your permission.

If you're not sure if life insurance is for you, we've also covered the top 3 alternatives to life insurance.

To compare your free life insurance quotes from leading providers, click here.

[1] https://www.which.co.uk/news/article/a-third-of-parents-dont-have-life-insurance-should-you-take-out-cover-aBmOs3L4khQO

[2] https://www.actuarialpost.co.uk/article/two-fifths-of-homeowners-are-not-taking-out-life-insurance-20452.htm