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Family life insurance

Find family life insurance that’ll protect your loved ones

  • Find the perfect policy at the perfect price

  • Get a quote in just 3 minutes

  • Compare deals from trusted insurers

How can life insurance protect my family?

If you’re looking for a way to ensure your family wouldn’t struggle financially without you, then life insurance can help

While family life insurance itself isn’t a specific policy type, there are ways life insurance policies can protect you and your loved ones.

The pay-out from a life insurance claim could:

  • Help keep your family afloat if you pass away
  • Clear your mortgage if you die and allow your family to keep their home
  • Act as an inheritance, setting up your children for life

What type of life insurance is best for my family?

There are 3 main levels of life insurance to choose from, and each could help your family in different ways.

  • Whole life insurance. Whether it's 5 years from now or 55, your loved ones will still get a pay-out. It pays out the same amount no matter when you die and if you keep paying for the insurance, you’ll continue to be covered. Some policies even let you stop monthly payments after a number of years, so you’ll still have cover without any further costs. Whole life insurance is only available to take out for those between the ages of 50-80.
  • Level term life insurance also pays out the same amount no matter when you die. It differs from whole life insurance because you choose a cover period, say 25 years, and if you die during that time, your loved ones get the amount you’re insured for. Inflation can be an issue with level term insurance as it means your pay-out may be worth less in 30 years than it would be today.
  • Decreasing term life insurance pays out less the further into the policy you get. Most people take it out to cover their mortgage, which also decreases over time. If you took out £100,000 of cover and died five years in, you might get £90,000 as a pay-out. Die in year 25 of that same policy and you may get £10,000. It’s usually cheaper than other types of life insurance for this reason.
Types of insurance Pros Cons Good for
Cover for life with a guarenteed pay-out
Usually a more expensive option
Ensuring you always leave something behind
Same pay-out for the whole cover period
Typically costs more than decreasing term life insurance
Covering everything you need to, for a set period
Cheapest option
Pay-out decreases overtime
Covering a mortgage

How much family life insurance do we need?

When taking out life insurance for you and your family, you’ll need to decide how much you want your pay-out to be.

This can be tricky, but there are a few ways to settle on the right figure.

You should think about:

  • Your mortgage repayments and how much is left to pay. If you died in the next few years, could your partner keep up with the repayments? If not, then leaving enough behind to clear your remaining balance could help your family keep your home.
  • Your family’s expenses and how much they would need to live comfortably. Think about general outgoings like food, travel, bills and any other expenses like education.
  • The age of your children and if your children are still financially dependent on you. It’s worth thinking about how long this will be the case. Think about how much they’d need, and for how long, and tie your family life insurance cover amount to this.
  • Funeral costs are also worth considering. The average UK funeral costs almost £4,0001, could your family afford to cover your funeral?

1According to Co-op funeralcare, their average total cost for a funeral in 2020 was £3,740

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Who can I cover on a family life insurance policy?

Most policies will only let you cover those over age 18. But some offer limited cover for your kids too. If they do, you’ll be given a set amount you can claim for if, tragically, one of your children passes away.

This could be used to cover funeral costs, or simply to make life financially easier at a very difficult time. Claiming for a child won’t affect the rest of your policy either, so you’ll still have life cover if you do need to make a claim and will still get the same pay-out if you were to pass away.

While there’s a minimum age you’ll need to be to take out a policy, there’s usually no upper age limit. Standard life insurance policies will also usually cover you up to any age, although you may get a better deal with a dedicated over-50s policy. Over 50 life insurance policies will offer you guaranteed cover up until age 84 and will normally cover you beyond that if you answer a few medical questions.

For joint policies, as long as you live at the same address, and are both over 18, you’ll be able to share cover. You don’t need to be married, or even in a relationship. You could even cover yourself and a child, as long as you’re both over the minimum age.

Can I leave my family life insurance pay-out to my children?

Yes, but there are a few things to consider before you do:

  • Children cannot inherit from a will if they’re under 18, so you’ll have to nominate a trustee to look after your pay-out until your children come of age. Once they do, the money can then be transferred to them.
  • If you want your pay-out to go to your family as a whole, you could nominate your partner as the inheritor,and they could use the pay-out to support themselves and your kids.
  • If you’re a single parent or would rather the money went directly to your children, you’d need to make this clear in your will.

Another way to do this would be to put your family life insurance pay-out into a trust. This is known as writing life insurance in trust, and it ensures that your pay-out goes to exactly who you want it to. If your kids are under 18, you’ll again need to nominate a trustee to oversee the money until they come of age.

With a trust, you can specify when your children get the money. If you think 18 is a little young to be receiving a large pay-out, for example, you could ensure that they couldn’t access the money until age 25.

Will my family pay tax on the money they receive?

This depends on whether you write your life insurance into a trust.

When you die during the term of your life insurance, the pay-out forms part of your estate. This is the sum total of everything you leave behind.

If your estate amounts to less than £325,000, you pay no tax on it. But if your estate, including your pay-out, exceeds £325,000, you’ll pay 40% tax on anything above that threshold.

This can be easily avoided by putting life insurance in trust. Doing this will separate your pay-out from your estate so your beneficiaries get the full amount tax-free, even if your estate is over the £325,000 UK inheritance tax threshold.

You’d be wise to do this if your mortgage is more than £325,000. If your pay-out is over the threshold, the tax you’d have to pay on it may mean it’s no longer enough to cover your mortgage. Putting your policy into a trust is a smart way to ensure it is.

Trusts also usually allow your beneficiaries to get their pay-out quicker. With a will, your pay-out may have to go through probate, which can take a long time. With a trust, it normally doesn’t.

Level term life insurance

What about critical illness cover for families?

Critical illness cover can be added to a life insurance policy, usually for an extra cost. It covers you for serious illness or injury and if you make a successful claim you’ll receive a pay-out. You can use this however you like, but it’s a particularly good way to support yourself during your recovery or to fund changes to your home if you’re left with a disability.

Families can benefit from it too, as it ensures thatif one household earner is unable to work, their income can be replaced by a pay-out. With sick pay in the UK currently at £96.35 a week, this can be a handy way to ensure your family can maintain its standard of living with a reduced income.

Some life insurance policies also let you cover your kids, so you’d be able to claim for a set amount if they became seriously ill or suffered an injury. This pay-out could then be used to support them, pay for private healthcare to help speed up their recovery or just to make family life a little easier in a difficult situation.

Should we think about joint life insurance?

Joint life insurance lets you cover two lives at once, so it’s particularly well suited to families.

With both you and your partner insured, you’d know that your kids would be looked after financially if either of you passed away.

This isn’t the case with individual life insurance, where only one of you is covered. This can cause issues if the uninsured partner passes away, leaving the surviving partner and any kids they had with only a single income, and no pay-out to make up that loss.

There are downsides though. Joint policies only pay out once, so if both of you died at the same time, your beneficiaries would only get a single pay-out. If you each had individual life insurance policies, they’d get two pay-outs. This would cost you more, however, so whether you want to pay that depends on whether you think your family needs that extra level of support.

How do I get a family life insurance quote?

Getting a life insurance quote is easy. We’ll ask you for a few details, and then compare deals to find the one that best suits your family’s needs.

We’ll need to know:

  • Your name and age
  • Whether you want joint or single life insurance
  • How much cover you want, and for how long
  • Whether you have any pre-existing medical conditions
  • About your lifestyle, like whether you smoke

Having these to hand before getting a quote can speed up the process and help find you a deal faster.

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What our life insurance expert says

Life insurance is about making sure your family is cared for if you pass away. So finding the right policy is crucial. Think about what you want covered before you dive in, whether that’s just your mortgage or something a bit more. We’ll do the rest to help you find the right policy for you.

expert comment signature Louise Thomas personal finance

Louise Thomas

Life insurance expert

Confused Life is provided by Direct Life & Pension Services Ltd, who are authorised and regulated by the Financial Conduct Authority. Registered office; 2nd Floor Gateway 2, Holgate Park Drive, York, United Kingdom, YO26 4GB. Registered in England and Wales No 2467691. Our service is free and compares a wide range of trusted household names. Confused.com is an intermediary and receives commission from Direct Life & Pension Services Ltd which is based on a percentage of the total annual premium if you decide to buy through our website. We pride ourselves on impartiality and independence – therefore we don’t promote any one insurance provider over another.