Once you start a family, this is the best time to protect them with family life insurance and although the younger you are the cheaper it will be, most of us leave it until our second or third child or when we become more aware of its importance in our early forties.
Many people also think that once they have mortgage protection (reducing cover life insurance) their life insurance is sorted and their family is financially protected.
But, it is really important to understand that life insurance is about replacing lost income, should that income disappear and it will disappear, God forbid a family breadwinner is no longer around!
Family Life Insurance – How Much Should I have?
As a general rule of thumb, parents should protect their family’s financial future with up to 10 times their gross annual income and with a minimum cover level of €300,000. If both parents are bringing home an income, they can choose the same or different levels of life insurance on the one dual-cover policy.
Family Life Insurance – How long Does it Last?
To offer the best value, life insurance should last throughout your life, but there’s a clever way of keeping its cost down. We all need higher cover during our working lives than when we retire, the kids have moved on and the mortgage is finally paid off, lesser cover is needed as we have lower expenses come old age.
So, the best way to set-up your family protection plan is to choose a policy term up to your 68th birthday or if a dual life policy until the older partner’s 68th birthday e.g. if you 38 choose a 30-year policy. Then to allow a cover extension, but with the option to reduce your cover into old age, add a “Conversion Option” to your policy at set-up.
Family Life Insurance – How Much Does it Cost?
Family Life insurance is relatively inexpensive, especially if you start your policy when you’re still young and healthy. The factors that can increase its cost are smoking and serious chronic health issues.
With our current discounts applied €300,000 life insurance for a 35-year-old, non-smoker to age 68, with the option to extend up to age 91 included, will cost just: €26.14 PM.
For a dual life €300,000 policy, based on a 38 and 35-year-old, non-smokers with our discount applied you would pay only €50.44 PM. Again this is a fixed price policy with the option to extend the cover term later and with the potential to pay out €600,000.
Family Life Insurance – Key Pointers
1. Never opt for joint cover life insurance quotes, Dual Cover can payout twice i.e. once on each person covered, but costs no more than joint cover that will pay-out only once.
2. Always include a Conversion Option this is what allows you the option to extend your cover beyond its original term without any requirement for fresh medical health information at the time.
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Deirdre O’Reilly – QFA – Protection Specialist
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