Life insurance for parents
Becoming a parent is one of the most difficult and rewarding things that anyone can experience in their lives. A life insurance policy is typically the best and the cheapest way for a parent to provide financial protection for their children.
The cost of raising a child is mind blowing and can be extremely difficult for many, especially with ever increasing costs of daily living. It’s sometimes difficult to know what to prioritise and what’s important with so much going on in our lives.
Average cost of raising a child UK
A recent study has suggested that the average cost of raising a child in 2022 had now increased to between £150,000 to £200,000. This is the basic costs of raising which includes food, housing, and childcare costs, it does not include holidays, gifts, or hobbies.
Life insurance for parents is extremely important and should be at least considered as a high priority. If anything was to happen to us then we should make sure that our children at least have financial security.
Another critical point is that life insurance for parents is often far cheaper than we think and can be very affordable.
There are lots of questions that we hear from parents that are either considering life insurance for the first time, or renewing an existing policy. Here are answers to some of the most common questions that people ask about life insurance for parents with some useful hints and tips.
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Life insurance for new parents
The most exciting point for any couple is welcoming your first child to your family. Most new parents will experience a mix of emotions as they establish their own family for the very first time.
One of the overwhelming emotions that we feel as a new parent, is the need to protect our children at any cost. Life insurance for new parents gives us an element of this as it gives our children financial protection should anything happen to us.
Having a baby is a stressful time and there is a list of things that you’ll want to do and need to have to look after your child. Life insurance will seem quite low on the list of priorities, but it is extremely important to make sure that your family has financial security.
Things to think about when arranging life insurance for new parents:
- Mortgage or rent costs
- Length of cover (age of dependency)
- Level of cover needed (£s)
- Income (e.g. salary, bonus, rental income, full time or part time work etc.)
- Outgoings
- Credit cards or loans
Life insurance can be confusing for new parents and it’s important to get proper advice to help make your decisions easier.
There are several options with life insurance for new parents and so an expert will break these down for you and explain what they do. You should also consider which type of cover that you need, such as:
- Critical illness cover
- Income protection insurance
- Health insurance or private medical insurance
Another major benefit to life insurance for new parents, is the potential cover that you can get for your baby. Some insurers offer free child cover or you can add children’s critical illness insurance as an optional benefit.
How does life insurance for parents work?
A life insurance policy pays out a cash lump sum if you (or your partner) dies during the term of the policy. This payment can be used for any number of reasons, but there are several most common uses, including:
- Pay off your mortgage or pay rent
- Pay for school fees
- Replace lost income
- Provide care for the children
- Pay for holidays and hobbies
If you consider what you would want for your child financially and how life insurance can help to provide this for them. It’s always difficult to think about a world without one or even both parents, but this is the sort of conversation that you should have when considering your life insurance needs.
The questions that you should be asking yourself:
- How much would I want to leave for my family?
- How long do I need to have protection in place for?
- What savings do I have already?
- Would my children have any support from the family? (especially if under the age of 18)
- How much can I afford to pay each month?
The answers to some of these questions will help you to figure out what type of cover you need and how long you need it for.
More on this topic – Life insurance for Mums.
Can all parents have life insurance?
You should be able to get life insurance regardless of your situation and most parents will at least have an option available to them.
Life insurance for parents is underwritten in the same way as any other life insurance policy. This means that your cover and your premiums will be based on several key factors, such as:
- Age
- Smoker status
- Lifestyle
- Medical history
- Occupation
- Sports or hobbies
There are very few actual reasons why parents can’t get life insurance at all, but it will be potentially more difficult for people with pre-existing medical conditions or ill health.
The most common reasons why parents might struggle to get life insurance are:
- Outstanding investigations
- Awaiting surgery or treatment
- Recent diagnosis (of a condition)
Most life insurance applications will ask questions about your health and your medical history. If you disclose a pre-existing medical condition then you might need to provide further medical evidence, such as a GP report.
You should be able to get life insurance regardless of your medical condition and you might need to get advice from a medical life insurance specialist.
How much is life insurance for parents?
Life insurance premiums are calculated based on several key elements, including:
- Age (Date of birth)
- Sum assured (amount of cover)
- Term (length of policy in years)
- Type of cover (e.g. level or decreasing life insurance)
This will give you an idea of cost of life insurance for you and ultimately the younger and healthier you are, the cheaper cover will be. Some of the additional factors that might have an impact on your life insurance premiums include:
- Smoker status
- Body Mass Index (BMI)
- Lifestyle (e.g. alcohol consumption, sports, activities, etc.)
- Medical history
- Occupation
Your life insurance premiums will then be calculated based on all of these different elements to give you the final monthly premiums. Below are a couple of examples of how much life insurance for parents might be.
Find out more – Average cost of life insurance guide
Compare life insurance for parents – £200,000 over 25 years (non-smoker)
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Compare life insurance for parents – £200,000 over 25 years (smoker)
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Aviva free life insurance for new parents
You might have seen adverts or heard about a policy called ‘Aviva free life insurance for new parents’.
This is a policy that has been specifically designed for parents with children up to the age of 4 years old. The policy offers you £15,000 of life insurance for 12 months completely free of charge.
It was an incentive that was introduced by Aviva several years ago to help new parents to understand life insurance, and to see the value.
- Free life cover (no bank details or payment details required)
- £15,000 of life cover (each parent would have this amount of cover for 12 months)
- Birth to age 4 (can be used any time from birth to any age up to four)
It’s extremely quick and easy to apply for and will pay out automatically if you die within the 12 months of free parent cover.
The only condition when applying for Aviva’s free parent life insurance is that you must not have had a medical diagnosis or treatment for cancer in the past 12 months. This is the only medical exclusion with the Aviva Free Parent Life Cover plan.
You can apply online here via the Aviva website.
Find out more about Aviva Life Insurance.
Best life insurance for parents
There are a couple of main types of life insurance policies and the best life insurance for parents is Family Life Insurance (Level Term Life Insurance).
Family life insurance is specifically designed to protect children and dependents within the family if a parent or partner dies. The other main type of cover is Mortgage Life Insurance (decreasing term life insurance) which is specifically for a mortgage.
The name means:
- “Level” as in it pays out a level lump sum on death so the amount of cover always stays the same
- “Term” refers to the fact that the policy has a term or period of cover which is usually between 5 and 40 years on average
Another option, which can be slightly cheaper and more affordable, is Family Income Benefit Insurance. This policy is less common but can be just as useful as it pays out an income to your family for the remainder of the term from when you die.
Best life insurance for young parents
There are also specific options that are available to young parents to make life insurance cheaper or more affordable to begin with.
Life insurance for young parents will usually be cheaper than older or elderly parents, because premiums are lower at a young age. As you get older, life insurance premiums will automatically increase if you apply for a new policy.
It is always cheaper to get life insurance when you are young, rather than wait until later in life when the risks of paying more are higher.
Best life insurance options for young parents:
- AIG Low start life insurance (premiums increase over the term of cover)
- Aviva Free Parent Life Cover (£15,000 of free cover for 12 months)
Our advice here is that life insurance is a great way for young parents to give their partner and children financial security. It gives young parents peace of mind that the family is protected if anything should happen to them.
More about AIG Life Insurance.
Learn more in our guide to finding the BEST life insurance.
Life insurance for elderly parents
As we get older, our needs and our situation will change, and so will our life insurance requirements. It is still advisable to have life insurance for elderly parents even though our situations might be very different to young parents.
Why elderly parents might need life insurance:
- Provide protection for Inheritance Tax (IHT) liability
- Leave a legacy or gift to our children
- Financial protection for grandchildren
- Cover any remaining debts
- Care Home or Nursing Homes fees
Life insurance for elderly parents premiums will be higher than for younger parents or earlier in life, this is because the risks of claim will be higher. Health and medical risks increase significantly later in life and hence the reason for paying more for life cover.
Also, life insurance for elderly parents can be different to different people because of what we consider to be elderly.
You can apply for life insurance up to around age 80 and most life insurance providers will now allow you to take cover to age 90. There are also other policies, such as Whole of Life Insurance or Over 50s Life Insurance, that provide cover beyond age 90.
More about OVER 50s LIFE INSURANCE.
Life insurance for single parents
Single parent families are more common now than they have ever been in the past, and so it’s not unusual to have life insurance for single parents. It is very typical for UK families to have single mums or dads as the main care provider.
The only real difference in the actual cover is that the best option is a single life policy rather than a joint life policy. The other major difference is thinking about what you would want to happen if you die and how you would want to provide for your children’s future financially.
Key questions for life insurance for single parents:
- Would your ex-partner be responsible for the care of your child?
- Are there any relatives to care for your child?
- Do you want to write your policy in to Trust for your child?
- Are there any other children from other relationships to think about?
There are lots of different reasons why you might be a single parent and life insurance can often be adjusted to fit your needs. Ultimately, the most important thing is that you’ve got cover to protect your children financially.
Joint life insurance for parents vs single life insurance
It is common for parents to be two people and so often would apply for ‘joint life insurance’ to cover both lives simultaneously. There is another option which is to take out two single life insurance policies at the same time.
There are Pros and Cons for each of these options and it’s all dependent on what you want and what you can afford to pay.
Advantages of joint life insurance for parents
- Cheaper premiums
- Covers both parents simultaneously
- Provides a single lump sum on death
- Less hassle and quicker
Disadvantages of joint life insurance for parents
- Only pays out once
- Difficult if parents separate
- Not always suitable for pre-existing medical conditions
- Can work out more expensive for less cover
Advantages of single life insurance for parents
- Cover pays out twice
- Each parent has their own cover if they separate
- If one parent dies then cover continues for the surviving partner
- Better for pre-existing medical conditions
- Can be more cost effective for cover amount
Disadvantages of single life insurance for parents
- Can be expensive and unaffordable
- More underwriting potentially
- Can be more complicated
- Manage two policies rather than one
For more information about this visit our page about single or joint life insurance.
Learn more about JOINT LIFE INSURANCE.
How to get life insurance for parents
There are several different options when you are looking to get a new life insurance policy for yourself or for you and your partner.
The most common options are:
- Speak to a life insurance broker or specialist to get the right advice and to search for premiums from multiple insurers in one go. Usually this is the most common and the easiest, because you’ll only need to answer one set of questions and your advisor will search for the cheapest premiums from the whole market
- Apply for life insurance online or via a price comparison website which can be quicker and cheaper for some people. This is often a good way for someone with previous experience or knowledge of life insurance to get cover. Premiums might be discounted with some insurers, depending on the website you use
- Apply for life insurance through your bank or building society can seem like a good option, but this isn’t usually the case. Some banks will offer life insurance through a partner of theirs, but you’ll usually pay higher premiums than elsewhere
- Apply for life insurance direct with an insurer which you’ll probably see various adverts for on Google and Social Media. This approach can be a way to get cheaper premiums if you’re lucky enough to hit the cheapest insurer when you apply. It’s not always the best route because options are limited and premiums can be higher
Useful resources
Office for National Statistics – Families and households in the UK
Statista – Number of households in the UK (By type of household)
