Protecting your family is important, which is why many of us take out Life Insurance for the first time when we become parents.
Taking on the many responsibilities that inevitably come with raising a family is a big part of parenthood. Many of these additional responsibilities are financial. Taking out a Life Insurance policy means you could continue to provide for your children even if the unthinkable should happen.
The cost of raising a child
There are so many costs associated with raising a child these days. If you’re a new parent it makes sense to weigh up all your new financial responsibilities and ask yourself how easy it would be to take care of them in your absence. A quick summary of the costs faced by most parent’s shows just how much there is to take into account:
For many the arrival of kids is a cue to take the plunge and buy a home. This typically involves taking out a mortgage, which can often become the household’s biggest ongoing expense. It’s important to ensure you have enough protection in place to cover this repayment in the event of your death. The estimated average monthly repayment on a UK mortgage is over £900  .
This doesn’t just include the cost of existing childcare, think about all the time you spend looking after your kids – in your absence your partner could face considerable childcare costs. The average weekly childcare cost (25 hours) for an under-2-year-old in the UK is £104.06 .
It goes without saying that the cost of private education can be considerable – £286,000 on average  – but the cost of a free education shouldn’t be underestimated either – uniforms, sports kit and school trips all cost money.
You may not want to burden your loved ones with the responsibility of paying off your outstanding loans or credit card debt. Life Insurance could help ensure that any outstanding debt is eliminated.
If you’re putting money aside for your child’s future, perhaps by making regular contributions to a trust fund or savings account, you may want to ensure that these contributions are maintained in your absence.
- General costs of raising a child
There are countless other small, and not so small, costs associated with raising children, not least staples like food, clothes and nappies. Add things like toys and holidays to the equation and it’s easy to see how costs can add up.
It’s clear that the cost of raising a child can’t be taken lightly, which is why Life Insurance really starts to make sense when you become a new parent. If you want to ensure your children are fully protected and able to maintain the lifestyle you’ve worked hard to give them then Life Insurance provides precious peace of mind.
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The cost of raising a child from birth to the age of 21 is estimated to be more than £230,000  and the financial consequences of a parent dying can be considerable. The loss of a parent is bad enough but the loss of an income can seriously impact a child’s wellbeing.
Life Insurance for parents – what you need to know
If you’re new to Life Insurance, it can seem complicated – there’s a lot to consider. Don’t panic! Our team are here to help and there’s plenty of useful Life Insurance info right here on the Beagle Street website.
Single or joint?
If you’re a couple the first thing to decide is whether you’re better off taking out a single or a joint Life Insurance policy. There are a couple of important factors you should consider when weighing this up.
- It may seem prudent to only insure the main breadwinner, especially if the other partner spends most of their time caring for the kids, but it’s worth considering how that arrangement would change if the carer died. Would the breadwinner then have to forgo work to spend more time looking after the children? This could have financial implications.
- A joint policy might seem like a good idea but it’s worth comparing the cost of two single policies. A joint policy will only pay out once on the death of the person that dies first, then the policy will be cancelled.
Level or Decreasing Term Life Insurance?
Level Term Life Insurance
A fixed policy value that remains the same throughout your term and will pay-out exactly the same amount whether you die at the start or the end of the term of your policy. This is generally best suited to paying off fixed costs such as: your family lifestyle, debts and loans, an interest only mortgage, or funeral costs.
Decreasing Term Life Insurance
This typically offers cheaper monthly payments because the value of the policy decreases over time. It’s often used for financially protecting your loved ones from debts which get lower over time, such as a repayment mortgage, so it’s sometimes also known as Mortgage Life Insurance.
Life Insurance or Life Assurance?
Your next decisions:
How much cover do I need?
Don’t know how much cover you need? Use our handy Life Insurance calculator for help.
Check out our collection of handy guide pages to help answer any further questions you may have about Life Insurance.