Life Insurance for New Parents

Having a child is a life-changing event. As well as the joy of welcoming a new life into the world, you suddenly face the responsibility and challenges that a new baby brings.

When you decide that it’s the right time for your family to grow, it’s the perfect opportunity to make sure you have the right protection in place, just in case the worst should happen.

If you’re a new parent, or you plan to be in the future, here’s why it’s important to consider a life insurance policy.

Why a life insurance policy is important if you’re a parent

One of your main responsibilities as a parent is to provide for your children financially. This shouldn’t change, even if something happens to you.

As a new parent, you will have big plans for your children. You want them to have the very best life that you can provide. So, it’s important to think about what would happen if you weren’t around anymore.

• Would there be financial support in place to provide for them while they are growing up?
• Would it be possible for them to carry on living in the family home? 
• Would they still be able to go to university or college, or buy a home of their own?

For these reasons and more, new parents should consider a life insurance policy. By doing so, you will ensure that a lump sum will be available to provide financial support if something should happen to you.

You can even put your life insurance in trust. When you do this, you to nominate people you trust to look after the money and to make sure your wishes are carried out. This gives you the peace of mind that the right decisions will be made even after you’re gone.

Raising a child costs more than £150,000

Raising a child from birth to independence can be expensive. Indeed, the cost of bringing up your child is likely to be one of your biggest outgoings. 

In an October 2020 study, the Child Poverty Action Group looked into the full cost of raising a child until the age of 18. They found that the cost was:

• £152,747 for a couple
• £185,413 for a lone parent

What this means is, if something were to happen to you on the day your child was born, you would need to ensure more than £185,000 was available to meet the costs of raising your son or daughter to adulthood. 

As a parent, what do I need life insurance for?

As we saw above, raising a child is expensive. So, if you’re no longer around, you need to make sure that there is financial support in place. Consider issues such as:

• Where would your child live? If you want them to continue living in the family home, ensuring the other parent could repay the mortgage might enable this. There would also be the normal monthly outgoings to pay
• Would the other parent have to give up work to look after the child? If so, you may need to replace lost income
• Would additional help be needed to bring your child – perhaps additional childcare? If so, there needs to be money available to pay this

How much life insurance do I need as a new parent?

Everyone’s circumstances are different, which means that the amount of life insurance you need will depend on your own situation. 

Our online life insurance calculator is a really useful way of helping you to work out exactly how much cover you need.

Do I need life insurance if I have a child but I’m not working?

Many parents assume that, if they are looking after a child and not the main wage earner in the household, they don’t need to put a life insurance policy in place.

The truth is that it’s often just as important that stay-at-home parents or part-time workers are protected.

As a mum or dad, you’ll undertake hundreds of regular tasks, from nurse to babysitter, taxi driver to tutor. So, it’s important to think about what would happen if you weren’t around to fulfil these roles.

Legal & General research estimates that that the value of the unpaid work of a mum is worth £29,535 a year, while the unpaid work of a dad is worth £21,601. 

If something happened to you, could the other parent pay for the additional support they would need? If not, it’s time to think about putting a life insurance policy in place – even if you’re not currently working.

What type of life insurance policy is right for a parent?

There are different types of life insurance available. As an insurance specialist, we can help you to find the right cover for your needs, at the right price. Contact us for help.

• Level Term – this pays out a fixed lump sum if you were to die within a specific term. For example, you might take £200,000 of cover over 25 years. If you died within the term, the insurer would pay out the ‘sum assured’ (£200,000 in this example)
• Decreasing Term – here, the amount of life cover reduces over the term. If you died towards the start of the policy, you’d get a higher payout then if you died towards the end. This is typically designed to provide enough to pay off a repayment mortgage, which is why it’s sometimes called ‘mortgage life insurance’
• Family Income Benefit – here, instead of one lump sum, your beneficiaries receive a regular amount between your death and the end of the term of the policy. It can help replace lost income until your child is financially independent
• Critical Illness – this provides a tax-free lump sum if you’re diagnosed with a serious medical condition covered under the policy – for example, cancer, heart attack or stroke. It is designed to provide financial support when you are seriously ill, helping you to replace lost income, pay your bills, or even pay off your mortgage.

Should we get joint or single cover?

Taking out a joint policy with the other parent could be cheaper than taking out two separate policies. 

However, you can only claim on a joint policy once, so if both of you were to die then your beneficiaries would only receive one payout.

It can also be hard to ‘split’ a life insurance policy in the future – for example, if you and the joint person separate.

New parent? Talk to use to get the right cover for you

Becoming a new parent is an exciting time. But, a 2020 study by insurer Aviva found that parents were ill-equipped to protect their family against the worst happening.

Only around a quarter (27%) of new parents had put any life insurance in place to protect their children, even though two-thirds had installed stair gates.

Paul Brencher, Aviva UK Health and Protection Director said: “Considering that buying your first house and starting a family are traditionally the most common life events that prompt the arrangement of life insurance, it is very concerning to see that nearly three-quarters of first-time parents are not protecting their families’ future financial wellbeing.”

We’re life insurance experts and specialise in finding the right life insurance policy if you’re a new parent. 

We work with the UK’s leading insurers to find the right cover, and we’ll search the market to find the right price. We even take less than the standard commission to reduce the cost of your cover. 

Talk to us today or compare life insurance quotes online.

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