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Protecting Your Family

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I know, I know – it’s not something we ever want to consider, but it’s a fact of life that none of us are going to be around forever. We don’t know how it will happen and most of all, we don’t know when. As parents, we have a big role to play in life and this is especially true in the first 18 or so years of our children’s lives.

There’s one way to really safeguard your family’s future if anything was to happen to you or your partner, and that’s with life insurance. It’s probably been on your life admin to-do list since you started your family, but it’s time to stop putting it off!

Here’s a few different insurance products that should be on your radar and the reasons why they are important to consider taking out…

Life insurance

The most common and most talked about product within the life insurance family is of course, life insurance. Life insurance pays out a lump sum when you pass away which is then given to your beneficiaries; so your partner or your children if they’re old enough. This payout means that life can go on within some sort of realm of reality when you’re not around. Losing a partner or a parent is difficult enough. The last thing a family then wants to deal with is paying off any debts, getting on top of bills and trying to keep food on the table.

The best thing is, life insurance premiums really aren’t too expensive depending on your individual circumstances. Take it out now while you’re young, healthy and low-risk and your monthly premiums will probably be somewhere between £20-35 a month. Surely that’s got to be worth it for protecting your family’s future?

Family income benefit

Family income benefit is a very similar product but it works in a slightly different way. Instead of paying out a lump sum when you pass away, it instead provides a family with a regular income. When setting up a family income benefit policy, you decide on a policy length and the amount of money your family would need per month in order to be financially secure.

Let’s say for example that your family would need £2,000 per month for the next 20 years to maintain a comfortable life without you. If you passed away within the first year of the policy, the insurer would pay out that sum for the full 20 years. If you passed away 15 years into the policy, they’d receive £2,000 a month for the final five years. After 20 years when the policy ends, you can’t claim and there won’t be a payout. You’re essentially paying for that peace of mind and protection.

Mortgage protection insurance

This insurance product pays out a lump sum like life insurance, but it is specifically designed to pay off your mortgage. Let’s face it, your mortgage is probably your biggest financial commitment and probably always will be. If your family can’t keep on top of the repayments

with one less income, they may be faced with being uprooted from the family home in a difficult time. This is what mortgage protection insures against.

When taking out mortgage protection insurance, you need to decide whether you want to take out level term cover or decreasing term cover. Level term cover basically means that your payout will always be a fixed amount, no matter when in the policy you claim.

If you decide on a £200,000 payout to cover your mortgage, then this is what you’ll get when you claim. With decreasing term cover however, as the name suggests this decreases with time, just like the amount left on your mortgage does. If a claim was to be made 10 years into a 20 year policy, the payout would be half of what it would have been at the beginning of the policy.

There are plenty more insurance products out there, such as income protection and critical illness cover to name a few. But these three products above are probably the most important for parents to consider when protecting their family. You don’t need all of them, but you should have one of them.

Every parent wants to be their child’s hero – life insurance just means that you can still look after them even when you’re not around anymore.

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