Christmas is well and truly out of the way, but the bills that follow it are still coming in. We can’t avoid the fact that having a family can be expensive.
Of course, we don’t begrudge the costs of making our children happy, but it might prompt us to ask the question of how those costs – and all the other expenses of bringing up our next generation – would be covered if we were not there to provide for them ourselves.
If you are in good health you may feel confident that you are able to provide for your family. But the sad fact is that none of us know what is around the corner. So, ask yourself, how much does your family need each month? If your monthly income was to stop coming in, they would need to replace it to pay the mortgage, and take care of bills, from food to council tax.
The insurance protection you need.
Fortunately, there are life insurance products which can provide for your loved ones.
Various levels of cover can be provided – at its most basic, if could ensure that the mortgage could be paid off and the family home retained. The chances are that you arranged this type of cover when you took out your mortgage.
But by choosing the appropriate level of cover which meets your current needs and circumstances, you could provide additional financial support – even a sum capable of replacing some of your income.
There are also several types of life insurance. Level term assurance pays out a fixed sum if you die during the term of the policy. Increasing term assurance (Index Linked life assurance) is designed to keep pace with inflation and can provide a fixed repayment that goes up (along with premiums) over time.
However, if you are thinking about protecting a young family, the most appropriate life assurance may be Family Income Benefit. This pays out a regular tax-free income from death until the end of the policy term. Policies can be arranged to run until you retire or until your youngest reaches 18 or 21 years of age.
It’s not just you
It is easy to imagine that a full-time parent does not need cover, but this can be a costly mistake. Childcare is expensive and replacing the services of a full-time parent is a major expense. If you had to pay someone to pick up your children, drop them off at school and look after them until you came home you would soon see how the costs add up.
You can arrange joint cover for yourself and your partner, which might help keep costs down.
What are the costs?
The cost of the cover will vary based on many factors. How much cover you need is obviously important. A policy that provides a £1 million of cover will cost more than one designed to deliver £100,000.
Your current age is probably the next most important factor. The risks to your health and of early death are obviously higher in your 50s and 60s than in your 20s. This is why arranging cover as early as possible will actually save you money. Your premiums could be substantially smaller and fixed until the end of the policy.
Of course, there are other factors which influence the cost of your premiums. Your health and your profession, where you live, and your lifestyle can all affect how much you will need to pay. This means that getting a good deal on the insurance you must have can seem complicated.
Getting the cover, you and your family really want for the lowest cost is easier with some expert help. At Continuum we would be happy to provide it.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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