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Are your Children Protected?

After a particularly difficult and bumpy few years and with uncertainty still on the horizon, now seems an appropriate time to review your financial situation.  This is particularly important for people with children to ensure that loved ones will be protected, no matter what life throws at them.  Having the right insurance in place is often key to making this happen.

Family life insurance protection cover Coombes & wright Hertfordshire Kent

The basics of life insurance

Life insurance comes in two main forms, whole life, and term.  Whole-life policies remain in effect indefinitely.  This means that, as long as the policyholder keeps making the payments, their heirs are guaranteed to receive a payout eventually.  Term policies are only valid for a specific period.

If the main purpose of your life insurance is to protect children in the event of your death, then term assurance may be the more practical option.  It will ensure that your children will be provided for until they are adults and hence can provide for themselves.

In addition to ensuring that you have a suitable level of insurance coverage, you may want to think about how the proceeds will be paid.  Putting the money into a trust would give you some level of control over how it is spent.  It would also separate the insurance payout from your main estate.  This reduces the taxable value of your estate and hence could reduce your inheritance tax bill.

Life insurance is for more than just the “breadwinner”

Both parents need life insurance, even if only one earns an income.  The homemaking parent provides childcare, which has an economic value.  It may even be appropriate to extend life insurance cover to the children themselves.  The death of a child can lead to expenses for the whole family (e.g. funeral expenses), and the cost of cover is likely to be minimal.

Last but not least, if you depend on relatives for childcare, e.g. grandparents, then it may be advisable to look at life insurance for them too.  This may be more expensive (due to their age), but you may only require a short-term policy e.g. until they go to school.

Renewing life insurance is a good opportunity to review legal documents

Ensuring your children are protected means more than just ensuring their financial well-being (although this is certainly a good place to start).  You’ll also need to think about who would care for them practically if you were no longer here.

It is highly advisable to document your wishes in your will so that they are both clear and legally enforceable.  If you do not, then your children may end up in the care system until there is a legally-binding agreement on their care.  This agreement may not be what you or your family would have wanted.

On a similar note, renewing life insurance is also a good time to look at powers of attorney (both financial and medical).  This can, indirectly, help to protect your children since it can make life a lot easier for anyone trying to juggle looking after you with looking after them.

Other forms of insurance

Your death isn’t the only issue that could impact your children.  In fact, anything which impacts you, your partner and your home can have a negative impact.  This means that, if at all possible, you should think through potential issues and take out insurance to protect against them. Types of cover you may wish to consider might include:

  • Family Income Benefit
  • Critical Illness Cover
  • Income Protection
  • Mortgage Protection
  • Private Medical Insurance
  • Rent Protection
  • Limited Company Relevant Life Insurance

Contact Coombes & Wright, we can help you source protection cover that meets your needs.

Book your free no-obligation initial consultation

The FCA does not regulate wills and power of attorney – For wills, power of attorney, and payment protection insurance, we act as introducers only.