Life insurance for new parents

Yes, it can be important. When you have a child, you may want to try to ensure that their needs will be met, even if you're not there to provide for them. If you’re considering life insurance, you’ll be helping to provide some financial security, to cover things such as everyday expenses, education costs, and any outstanding debts you may have left behind. This security can be crucial in helping your family continue day to day. By having life insurance, you can also rest easy knowing that your partner or child’s guardian won’t have to bear any financial burdens alone, helping them provide a safety net during a challenging time. 

Did you know we offer Free Parent Life Cover? You’ll get £15,000 of free life insurance for one year, for each child that’s under the age of four. So, if both you and your partner take it out that’s £30,000 for each eligible child. You can also take this out alongside any other life cover you might have for extra security. 

There isn't one insurance policy that could be considered 'best' overall, because everyone's needs and circumstances are different. The two main types of life insurance you may want to consider are term life insurance and critical illlness cover.

If you’re ever unsure about the terms of a protection insurance policy, or you just don’t know what could be best for you and your family, then speaking to a financial adviser might help. If you don't have a financial adviser, you can find one at unbiased.co.uk. Please be aware that you may need to pay for this advice.

Term life insurance

Term life insurance provides cover for a specific period of time. It pays out a lump sum on death, and can be taken out as a single or joint policy. If you opt for a joint policy, it will give you combined cover that pays out only once. It won’t provide cover for the second person once the first person has passed away. If you have separate policies and one of you passes away, their policy will pay out and then end, but your policy will continue. This can be more expensive than having a joint plan.

Currently we offer two different types of term life insurance; level and decreasing cover.

Level cover, sometimes known as family cover, enables you to choose the amount of cover you want, and pay the same amount of money each month until the policy ends. You’ll need to take inflation into account, as £100,000 for example, won’t necessarily be worth the same in 30 years’ time.

Decreasing cover means the value of your policy gradually decreases over the policy term until it reaches zero, but your monthly payments never change. This type of policy often works alongside a mortgage, so that if the worst happened, your partner or dependent could still pay off your mortgage, letting them stay in the family home. 

It's worth mentioning that with either of these policies, there is usually no cash-in value at any time. If you cancel your premiums, your cover will cease. You can find out more about the differences between level and decreasing cover for term life insurance in our article.

Critical illness cover

Critical illness cover pays out a lump sum if you are diagnosed with a critical illness covered by the policy during the policy term. This could provide much-needed support to you and your family during a challenging time. If your child is diagnosed with a critical illness we cover in our Critical Illness Plan, we’ll pay up to £25,000, or 50% of the cover amount (whichever is lower). Having this policy in place could help you sleep a little better at night (between bottle feeds and tears), knowing that you and your child could both be supported. 

Similarly to term life insurance you can choose between level and decreasing cover. You can pair up the policies if you wish; taking out life insurance and critical illness cover at the same time, to give you a shield when it comes to helping protect you and your family. There is no cash-in value at any time with either policy.

Figuring out how much life insurance cover you need depends on your financial obligations and goals. This means you may want to consider things like:

• Income replacement, or how much your family would need to replace your income. A general guideline is to have cover that equals five to ten times your annual salary.
• Debts and liabilities, such as a mortgage, car loans, or credit card debt, to ensure they can be paid off.
• Childcare and education costs, including the costs of childcare, and any extracurricular activities.
• Your child’s future needs, which may include your child’s wedding or contributing to their first home purchase.

Once you've understood your financial obligations and goals, you can estimate a cover amount that provides financial stability and suits your family's needs. 

To help work out how much life insurance you might need, check out our life insurance calculator.

As a single parent, life insurance can be that little bit more important. Whether you’re a mum or a dad, being a single parent means you can often be the sole financial provider for your child. With no secondary income, having cover can help secure your child’s future.

Here’s a few things to think about when choosing life insurance as a single parent:

• Adequate cover - Ensure your policy covers all potential expenses, including living costs, education, and debts. Your cover should be enough to support your child until they can become financially independent.
• Guardian support - Designate  a guardian who will care for your child if you pass away. Make sure your life insurance policy will also provide financial support for this guardian to manage your child’s needs.
• Affordable premiums - Term life insurance is generally less expensive and can provide cover during critical years.