Family life insurance

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Last updated: 4 January, 2021

What is family life insurance?

Family life insurance is a policy that pays out a lump sum if you die, but it also covers your children up to a set age.

The payout you choose for yourself when you take out family insurance is usually much higher than the payout you’d get for your child.

Having family insurance can give you the financial support you’d need if you took time off work to grieve.

It can also give you peace of mind that your family would have the financial support they’d need if you were to pass away. They could use the payout to pay off the mortgage or your debts, or just to cover day-to-day expenses.

How does family insurance work?

Life insurance pays out a pre-agreed lump sum if you die during the term of the policy. Some insurers let you add cover for your children too, which means you’re getting a family insurance policy.

Adding cover for your child means you get a lump sum if they die before you do. It’s valid up to a set age. 

You’ll pay monthly premiums to the insurer.

Heres help choosing the best family life insurance for you.

How to choose the best family life insurance, UK wide 

To get the right family life insurance, UK wide, you need to make a few decisions. 

You’ll need to:

  • Choose a payout amount: This will be the lump sum paid out if you die during the term of the policy. The very best family life insurance will pay out the most. But, the higher the payout, the higher your premiums are likely to be. So you should only get the cover you need. For example, you might choose to get enough family insurance cover so that your spouse could pay off your mortgage.

  • Decide how long the family life insurance policy should run for: Choose a term that suits your needs. But remember that the longer you choose, the longer you’ll be paying premiums for. Most policies have age restrictions, so your options become more limited as you get older.

  • Consider your child's age: You can add your child to a family life insurance policy, whether it’s yours alone, or a joint policy with your partner. This comparison shows the maximum age your child can be to get added to each policy.

  • What type of family insurance you’d like: There are usually three types of life insurance. There’s level-term, decreasing or whole of life. There’s more on these below.

Once you know what you want from your policy, you can get quotes to find the best family life insurance at a decent price.

Find out how to cut the cost of your life insurance.

Which is the best family life insurance for me?

There are three types of family life insurance, UK wide. These are: 

  • Level-term life insurance: This gives you the same payout, regardless of when you pass away during the policy’s term.

  • Decreasing life insurance: If you take out decreasing life insurance, the size of the pay-out reduces gradually. It works well if you’re taking out family life insurance to cover something like a mortgage or debts, which gradually decrease as time goes on anyway.

  • Whole-of-life insurance: This is guaranteed to pay out when you die, regardless of when that happens. It’s the most expensive type of life insurance because a payout is guaranteed. You might hear this called ‘life assurance’.

When it comes to family life insurance, is it best to add children to a single policy or joint policy?

You can generally add children to either type of policy.

A single life insurance policy covers just one adult. A couple would therefore need two single life insurance policies. You have to name a beneficiary.

A joint life insurance policy covers two people who are in a relationship, and can be cheaper than having two single life insurance policies. It pays out to the other person on the policy when one person passes away. However, it only pays out once, and not for both people.

When to review your family life insurance, UK wide.

You’ll need to review your family life insurance policy if you have more kids. You may want to add them to the policy. Or you might decide you’d need a bigger payout because you have more kids.

You should also review your policy to arrange a bigger payout if you move house and have a bigger mortgage that you’d need to cover.

Are there any alternatives to family insurance?

You could look into family income benefit insurance. This pays out a monthly income, designed to replace a lost salary. It would pay this until the policy term ends.

You may also like to consider taking out family critical illness cover in addition to family life insurance. It gives you a payout if you – or a member of your family – is diagnosed with a critical illness during your policy term. This could help with getting private medical care, or if you needed a lot of time off work. But you should be aware that, generally, if you add critical illness to your family life insurance policy, it will only pay out once. It won’t pay out when you are diagnosed and then again if you pass away.

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