Buying life insurance when you’ve had a child
With the excitement of the birth of a child, a piece of added protection often forgotten by new parents is life insurance. But if you’ve got a growing family, it is even more important to have the right cover to protect your loved ones should the worst happen.
Becoming a parent is a key time to consider life insurance, or to assess whether your existing cover is sufficient. By taking some simple steps you can rest easy knowing your family’s future is financially secure.
What costs should new parents consider when buying life insurance?
Bringing up a child means families face many new and unexpected financial pressures. Do you know how these will be paid for in your absence?
1) Mortgage – The main expense of most households. Many homeowners will already have some protection in place, but the birth of a son or daughter is a good time to re-check that you have enough cover against capital and interest repayments on your mortgage.
2) Childcare – As a new parent, you are not only providing financial support but also carrying out unpaid responsibilities looking after your child. This could leave your partner with expensive childcare costs, should one of the main family breadwinners pass away.
3) Education – Whether it’s school fees, paying for education-related expenses such as school trips, uniforms and sports kit or university tuition fees, you may want to ensure your offspring’s education costs are covered.
4) General costs – From food and nappies to utilities and clothing, there are numerous goods and services that will still need to be paid for in the event of a death to help the family maintain its current lifestyle.
Loans and Savings – Alongside your mortgage, there may be other loans or credit cards which you don’t want to leave your loved ones to pay off. You may also want to ensure regular payments into your child’s savings or Child Trust Fund account are kept up.
How much life insurance cover do new parents need?
The level of protection will depend on your personal circumstances and what costs your family could face in the event of your death. The general rule is to provide cover for 10 times your annual income although this can be increased depending on factors such as the number and ages of your children. If you want to know more you can read our article on how much life insurance cover you need.
Tip: Online calculators are a good tool to help you assess the right level of cover for you.
What protection will it offer my partner?
Life insurance provides protection for your partner against the financial burden that comes with the death of a loved one. If you are the main wage earner, it is important to cover the loss of future earnings and the impact of a reduced income. If you are not the main wage earner, think about the impact your loss would have on household costs, such as childcare.
How much will life insurance cost?
Your level of premiums will typically depend on three things
- The level of cover – the higher the payout, the greater the cost
- The length of the term – the shorter the term, the less the cost
- Your level of risk – overweight smokers, for example, are likely to pay more than fit non-smokers.
Find out more about how much it will cost by reading our article, peace-of-mind life insurance from just £5 a month.
Having trouble working out how much life cover you will need? Our life insurance calculator could help you out:
