New research from Compare the Market shows 39% of parents don’t have any cover in place, despite many saying they worry about how their family would cope financially if they died.
Here, we explain why life insurance might be worth considering if you have dependents, and how to choose the right cover for your family.
Do you have life insurance?
A survey by the comparison site Compare the Market found that 48% of parents have a life insurance policy, and 21% are covered by death-in-service benefits through work.
Only 8% have both types of cover, and 39% have neither.
This is despite the fact that 90% of parents say they worry about what would happen to their children if they died.
Figures from the Childhood Bereavement Network show that around 26,900 parents die each year in the UK leaving dependent children.
Find out more:What happens if parents die without having cover?
If a parent dies without life insurance, paying the mortgage could become a problem.
According to Compare the Market's survey, 53% of parents with a mortgage still owe more than £100,000, with the average outstanding balance at £145,720.
Many families don’t have the savings to fall back on. 42% of parents with a spouse said their partner wouldn’t be able to afford the rent or mortgage on a single income.
Many parents also have other debts. 70% owe money on credit cards or loans, averaging around £5,115. These debts would usually be paid from the estate, reducing what’s left to pass on.
Find out more:How much does life insurance cost?
The price you pay for life insurance varies significantly depending on your personal circumstances and the level of cover you need.
Any health conditions you have, or aspects of your lifestyle that could affect your life expectancy, such as drinking or smoking, may also impact your price.
Your age has a major influence too, and cover is substantially cheaper to buy when you're young.
For example, a 30-year-old non-smoker buying £300,000 cover can expect to pay around £117 a year, but a 50-year-old buying the same product can expect to pay £580.
Find out moreAre there any alternatives to life insurance?
Life insurance isn’t the only way to protect your family’s finances. Depending on your circumstances, you might also consider:
How to find the right cover for your family
If you’re thinking about life insurance, it’s important to find a policy that fits your needs. Consider these steps first:
Consider the type of cover you need
Start by deciding between term life insurance and whole-of-life insurance.
Term cover runs for a fixed period, such as until your mortgage is paid off or your children are financially independent.
Choose the right level of cover
Think about how much money your family would need if you weren’t around. This is called the 'death benefit' and should cover things such as mortgage payments, bills and everyday living costs.
If you’re choosing term life insurance, you’ll need to pick how many years your policy lasts.
Find out more:Compare quotes and providers
Life insurance isn’t just sold by banks and insurers – supermarkets, retailers and membership groups sometimes offer competitive deals, too.
In some cases, the same policy may be sold under different brands at different prices.
Find out more:Review your policy regularly
Major life events such as getting married, having children or buying a home can all affect how much cover you need, so it’s important to check your policy still reflects your current circumstances.
Find out more:source https://www.which.co.uk/news/article/4-in-10-parents-dont-have-life-insurance-is-your-family-protected-ayn1X4v0PN5o