Life insurance: peace of mind for new parents
Why do I need life insurance? Nothing can really prepare you for becoming a parent, for the overwhelming emotion you feel as you hold your precious baby for the first time. As most new mums and dads will tell you, you would do anything in the world to protect your little one, forever. And that includes having to think about some things you’d rather not – such as what would happen to your family if you were no longer around to support them.
Life insurance cover is something many people ignore until they become parents, when they realise that protecting their family is essential should the worst occur.
What is life insurance?
Life insurance cover makes sure your child, and any other family member who relies on your income, will be financially sound if you die or are unable to work. It helps cover the cost of any debt, such as a mortgage, and living expenses like food shopping, utility bills and childcare.
A lump sum payment can be made if you die or if you’re diagnosed with a terminal illness. Cover is based on a set term, which usually ends when your children are financially independent or you’ve paid off your mortgage.
How much cover should I get?
The amount of cover you take out will depend on your circumstances. It’s based on your income and the cost of outgoings if you were no longer able to contribute.
The payout can be around ten times the family’s income.
It’s important to review your life insurance policy if you buy a more expensive house or have another child. You may also want to cover your partner. You can take out two single life policies or a joint one, which pays out if you or your partner should die, or be diagnosed with a terminal illness.
How much does life insurance cost?
Your life insurance premium (the amount you pay) depends on a number of things. It’s cheaper if:
• You take on a shorter length of term – 15 years costs less than 25.
• You lower the amount you want to take out – the larger the lump sum, the higher the premium.
• You’re young, in good health and don’t smoke.
• You don’t have a high risk job or do hobbies that would be deemed risky.
Can anything prevent my family getting the money?
It’s important to disclose everything in your life insurance application. If you die, your insurance provider may not pay out if any of the information isn’t up to date or accurate.
Make sure you’ve given the company written permission to access your medical information. And before any payment is made, the company will need evidence to support the claim. Asda can help you with this; in the event of a claim you’ll have the support and guidance of our claims team. One way of ensuring a quicker payout to your loved ones is by placing your policy in Trust. Speak to your adviser.
What are the alternatives?
• Mortgage Life Insurance is designed to cover your mortgage.
• Income Protection Cover replaces your income if you suddenly can’t work due to illness or disability.
• Critical Illness Cover will pay out a lump sum if you suffer a serious illness like a heart attack, stroke or cancer, which can help towards medical costs and any lost income.
• Real Life Cover which is offered by Asda combines Life Insurance, Income Protection and Critical illness cover for the 3 most common serious illnesses; heart attack, stroke and cancer.
Starting a family can be an expensive time - but knowing your child is financially secure if anything should happen, is priceless.
