I very recently did a short presentation on how we can be protecting our children through very simple and straight forward protection strategies that are so easily forgotten about. I feel so strongly about the topic, that I decided this month’s blog post should be about protection for our children.
Firstly, if the answer to any of the below questions is yes, then you have a need for Personal Insurance:
- Do you have a mortgage?
- Would you or your partner have to change your current lifestyle if the other was no longer here?
- Would you have a child-care issue if you or your partner were no longer here?
- Do you have one house-hold income?
- Do you have dependent children?
- Would you struggle paying the bills without your partner’s help?
- Would your child’s next of kin struggle to pay for your children if you weren’t here?
Insurance not only financially protects your loved ones and children on death, but it gives you peace of mind through your life that your family will still be financially secure if something was to happen to you.
As a society we protect our car, home, pet and even our holiday, so why do only 50% of households with mortgages have life insurance? I feel this is my job and responsibility to make people aware of the importance of protection products for your family’s well being.
One of the main reasons people don’t have a life insurance policy, is affordability, personal insurance is not looked at as a necessity like car or home insurance and is seen as a luxury in the insurance department. However, the price for life insurance is very reasonable:
- £250,000 of level term life insurance for a 30-year-old female to age 70 is £13.19 per month.
- £250,000 of level term life insurance for a 50-year-old male to age 70 is £23.69 per month.
The younger you put life insurance in place the longer you benefit and the more affordable your policy will be. Your premium may increase depending on age, smoker status, BMI, previous medical history and family medical history, however each case and provider is different.
Arguably all types of insurance are to protect our children, however the main types of insurance I am going to discuss that are mainly to protect our children are: Critical Illness Cover and a type of Life Insurance called Family Income Benefit.
With a Life Insurance policy, your beneficiary would receive a the proceeds as a cash lump sum on death and it is up to the beneficiary to decide how they would like to use to money, however with a Family Income Benefit insurance policy the proceeds are paid as a monthly income, therefore the monthly income or monthly childcare that may have been lost is now covered, keeping two incomes within the family and therefore making sure the ongoing bills/ rent/ mortgage is paid. The monthly payment will continue until the policy end date, meaning if you take a policy out to age 70 and die unexpectedly at age 40 it would pay a monthly income till age 70, example prices are:
- £20,000 of family income benefit per annum to age 70 for a 30-year-old female is £18.59 per month
- £25,000 of family income benefit per annum to age 70 for a 40-year-old male is £30.29 per month
Another form of insurance that is not as widely known as Life Insurance is Critical Illness Cover, this pays a lump sum on diagnosis of a Critical Illness, such as Heart Attack, Stroke, Cancer, Brain Tumour, Alzheimer’s, MS. Each provider will have a different amount/type of illness’ they cover and different stages they may cover, make sure you check with your provider before going ahead with your policy that any illness’ you want covered, are covered. Critical Illness Cover can be added to a Life Insurance policy or can be a standalone policy.
How can Critical Illness Cover benefit your child? Well if you think six months ago your child developed a Critical Illness and is ill in hospital, as a family where would you be now?
- Would you still be working?
- Would you be able to take time off work?
- Would you be doing home alterations?
- Would you be looking to pay for private treatment?
For an extra couple of pounds each month you can actually add your child onto your Critical Illness policy, meaning that the policy will pay out a lump sum if your child were to develop a Critical Illness, therefore, financially helping your family, so you are able to be by your child’s side and help your child to a quicker recovery.
Most providers have a Standard and Enhanced child Critical Illness package, Standard covers the same illness as an adult and an Enhanced package includes child specific illness such as Celebral Palsy, Cystic Fibrosis, Down’s Syndrome. The Critical Illness cover usually covers children till they are aged 21 or 22, this depends on the provider, so make sure you are checking this before going ahead with any policy.
Child Critical Illness cover pays out a lump sum on top of your Critical Illness Cover, this is usually dependent on your package, this is around £25,000 – £50,000 and will cover all of your children, therefore, if you have to claim, your cover will still stay in place and can continue to cover all of your children. If you do have a valid claim for your child Critical Illness cover then your adult cover will still stay in place, meaning you will continue to be covered.
As you are more likely to develop a Critical Illness than die, Critical Illness cover can be more expensive than Life Insurance as you can see below:
- £100,000 of Life Insurance and Critical Illness cover to age 70 for a 40-year-old female is £54.90 per month.
- £200,000 of standalone Critical Illness Cover to age 70 for a 30-year-old male is £73.79 per month.
- £200,000 of joint Life Insurance and Critical Illness cover to age 70 for a 35-year-old couple is £148.30 per month.
However, as you can see below, to add your children onto your policy is only a small amount extra:
- £100,000 of Life Insurance and Critical Illness Cover with child benefit to age 70 for a 40-year-old female is £56.15 per month.
- £200,000 of standalone Critical Illness Cover with child benefit to age 70 for a 30-year-old male is £76.80 per month.
- £200,000 of joint Life Insurance and Critical Illness Cover with child benefit to age 70 for a 35-year-old couple is £149.55 per month.
I hope from this blog, you can see that there are ways we can be protecting our children throughout our lifetime and when we are no longer here. They are simple, cost effective and give you peace of mind throughout your life.
As always if you have any questions, please do not hesitate to contact me. You can contact me through our contact form or on 0191 491 4119.
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All prices quoted above are correct as at August 2019.