What should new parents know about Life Insurance?

Having your first child is a life-changing process, and with it comes a vast number of physical, emotional, and financial challenges.

If you’re considering taking out life insurance to provide your growing family with that all-important financial safety net, we’ve pulled together a short guide that answers some of the biggest questions we receive from new parents.

When should I get life insurance?

Two milestones in particular tend to encourage people to take out life insurance: getting married and having children. In both cases, the main goal is to protect those that rely on your income.

As a new parent, there are numerous benefits to buying your insurance now, many of which revolve around cost.

Prices will only ever go up as you get older, even if your circumstances remain the same. By purchasing your cover now, you can lock in a better monthly premium than you would in the future.

What’s more, the older you get, the more your chances of developing certain conditions will increase. Purchasing life and health insurance before you develop a condition means you’re more likely to get a cheaper price and less likely to have exclusions for any pre-existing conditions.

What types of life insurance are available for new parents?

There are many types of life and health insurance available to new parents, all of which help to minimise the financial impact for your loved ones if anything were to affect your income.

The most popular include:

Level term life insurance –

You choose the total pay-out value in advance and how long your policy will last. With level term insurance, you know exactly how much your partner, your children, or your children’s guardian will get if you were to pass away.

Decreasing term life insurance –

Many of your debts, such as your mortgage, will reduce over time as you slowly pay them off. Decreasing term life insurance factors this in and would pay out a larger amount if you were to pass away at the start of your policy compared with the end.

This reduces the cost of cover but may mean that your loved ones only receive enough to pay off your remaining mortgage.

Critical illness cover –

Critical illness cover provides a level of protection against a specified critical illness, paid as a lump sum. It can help cover any loss of income, the added cost of treatment, and provides an additional financial cushion by allowing your partner to take time off work to care for you if necessary.

In other words, you don’t have to worry about finances and can instead focus on getting back to full health.

When purchasing critical illness cover, be sure to check the terms and conditions for each provider. The conditions covered may vary from one provider to another, and cheaper quotes, often found online, may not cover a comprehensive range of illnesses.

Family income benefit –

This gives you the option of either life or critical illness insurance paid as monthly instalments rather than one lump sum.

Typically, family income benefit is paid until your youngest child turns 18, or until they finish university, to ensure that your family can maintain a standard of living and pay the increased costs that come with having a child.

Income protection –

Income protection cover will provide you with monthly payments if you are unable to work due to an accident or illness. This means that you can continue providing for your family without the stress of losing your home, or your life savings, as a result.

For help finding the most appropriate insurance for your unique circumstances, reach out to a specialist insurance broker who will recommend insurance that covers those things most important to you.

How much life insurance cover do I need?

As is often the case for any insurance, the level of cover you need will depend entirely on your unique situation, factors of which could include how many children you have, your debts, your lifestyle, and your finances.

When working out the level of cover you may need, there are some common outgoings to factor in:

• Mortgage or rent – This is one of the largest expenses for most families and should play a significant role in determining your level of cover.
• Bills – Essential monthly bills also need to be considered and will often go up in price with more people under one roof.
• Everyday costs – A growing family often results in a growing list of expenses, so it’s essential to factor in the increased cost of food, clothing, and toys to name a few.
• Childcare – Life insurance shouldn’t be seen simply as something to cover the breadwinner’s income. It can also pay for the increased childcare and nursey fees that may arise if you or your partner were no longer around.
• Education – This goes beyond just their schooling and university fees. You should also factor in the cost of books, equipment, and regular uniform changes.

How much does life insurance cost?

Once again, the cost of your cover will depend on a combination of factors, including the level of cover you opt for and the length of your policy, as well as your age, health, and personal circumstances.

If you’re worried about the cost of your cover, be reassured that there are different options and ways to structure your policy that can be more cost-effective:

• Take out a joint policy with your partner – Both yourself and your partner should have cover, even if just one of you is currently earning. Having a joint policy as opposed to two individual policies can make it cheaper overall and may be more appropriate to your unique circumstances.
• Alter the benefit level or policy term – When it comes to life insurance, having something in place is better than nothing, and you can always increase your level of cover at a later date.
• Consider a longer deferred period or short-term plan for income protection – This means that the length of time you need to be off work before you get a pay-out increases and the payment period is limited, usually up to 24 months per claim.
• Reach out to an insurance broker who will be able to find you the most cost-effective solution appropriate for your circumstances.

Finding the most appropriate cover for your family

Organising the most appropriate life insurance for your unique circumstances can be difficult, especially with a new baby taking up so much of your time.

If you’re feeling overwhelmed with your life and health insurance search, let the team at Way More help you.

As specialist brokers in the industry, we can search the market on your behalf and recommend the most suitable cover for your unique financial and medical circumstances, giving you more time to focus on your new bundle of joy.

To speak to one of our experienced and friendly advisors, simply fill in the form below….