Best Life Insurance for Mums

Best Life Insurance for Mums

Life insurance is life insurance, it does what you expect it to do. If you pass away a lump sum of money to your loved ones. 

Having children can often be the thing that makes people think, you know what, now is the time to start looking at things like life insurance. It makes sense, you want to know that if something happens to you that your kids are going to be ok financially. The loss of you as a parent will never be ok and money cannot make everything ok, but it can really help.

Let’s take a look at some of the key options for you.

Types of Life Insurance

There are lots of types of life insurance and some don’t even say life insurance in the name (thank you insurance industry…). Different life insurance policies do different things and there are some specific ones that work best for protecting your children.

• Level life insurance – with this life insurance policy the insurer pays out a sum of money to your children and the amount doesn’t change over time. If you set up the policy as £200k life insurance it will still be £200k in 5, 10, 20 years.
• Increasing life insurance – this is different as the sum assured of the policy increases each year to offset against the rate of inflation. The reason for this type of policy is that the value of £200k now is not likely to be the same in the future. It’s future proofing the value of the insurance as the economy grows.
• Family income benefit – this can be life insurance, even thought the name says income. It is a policy that pays an annual income to your children to help them remain financially secure.

Now, when I say these policies pay out to your children the only way to make sure this definitely happens if you put the life insurance into Trust. Trusts are funny things and can seem quite daunting, but when it comes to most pure protection life insurance policies, they are quite simple.

You choose who you want to help your children with the claim payout (the Trusttee(s)) and then name your children as the ones that you want to receive the money as Beneficiaries.

Which Insurer is Best?

No one insurer in the UK has the overall best life insurance policy. Your age, smoker status, occupation, travel, health and lifestyle all influence who is going to give you the best life insurance.

Some insurers have some specific quirks with their policies that you might want to consider, these can change over time and it’s essential to do research when you take out life insurance.

• Aviva – offer an option to include Global Treatment on to your policy that covers you and your child. Basically if you or your child are diagnosed with certain conditions and the best treatment is abroad, they will fly you out to the country, pay for your treatment and bring you home.
• Guardian – have the best terminal illness benefit in the market, if you choose their enhanced life insurance. They also allow you to bolt on children’s critical illness cover to your life insurance policy.
• VitalityLife – have the option for you to include children’s critical illness cover to your life insurance policy.
• Zurich – they give the option for your children to take out their own insurance policy when they become adults, without having to go through medical underwriting. They also offer an Accelerate option where they take you or your child abroad, pay for your treatment and get you home if you are diagnosed with certain conditions and the best treatment is outside the UK. This also includes specific genetic sequencing for cancer to better improve treatment plans.

These are just some examples of the unique ways that life insurance is offered in the UK. Life insurance in itself is very straight forward, but it’s the extras that can play a huge part in your decisions.

How Much Does it Cost?

As always, it depends. I mentioned earlier that age, smoker status, occupation, lifestyle and health can all have an influence on the best insurer for you. Also, how much insurance do you actually need?

When it comes to putting protection in place to specifically look after your kids a good staring point is to look at 3-5 x your annual gross salary. This is if you are taking out level or increasing term insurance.

If you are looking at family income benefit it’s a good idea to look at covering your annual nett pay, the amount that you take home each year. This means that your children should be able to maintain their current standard of living if you are not there.

Now the question is how long do you take this life insurance out for. That’s a very individual choice. Some people see children as independent at 18, 21 or 25. 

Here are some quotations based upon a 29 year old mum who is a non smoker, she is a Finance Manager and earns £38,000 a year. She is currently on maternity leave with her 4 month old child.

• Level term life insurance – £190,000 (5x salary) life insurance over 21 years costs £6.17 per month.
• Increasing life insurance – £190,000 life insurance over 21 years costs £6.17 per month. 
• Increasing family income benefit – £30,000 per annum for 21 years costs £10.50 per month.

These prices are guaranteed premiums. For the level life insurance policies this means that the price of the insurance will never change. For the increasing life insurance policies the premiums are guaranteed to increase alongside the sum assured each year, at a set rate.

It’s essential when you take out any kind of protection insurance that you check if the premiums are guaranteed, guaranteed age-banded, reviewable or reviewable age-banded. There might be slightly different wording used to this dependent upon the insurer. Guaranteed premium options are best if you can get them, they are the most expensive now but are by far the cheapest in the long run. 

A brilliant tip is to look at the premiums paid over term between the guaranteed premium and cheaper options. You will be surprised at just how much more you pay over time, if you take the cheaper option now.

Our award winning advisers arrange life insurance for mums every day. We even have specific insurances that can give you financial support if your child breaks a bone, is diagnosed with diabetes, blindness, deafness, or many other things that none of us every want to think about, but can happen.

Get in touch with us for a no obligation quotation today.

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