Family Life Insurance

Would you like to protect your family’s financial future? Family life insurance can cover you.

Discover more with our UK-based team.

What is family life insurance?

Family life insurance is a type of life insurance that helps to provide financial protection for your loved ones in the event of your death.

The death benefit from a family life insurance policy can be used to help cover expenses like mortgage payments, childcare costs, or outstanding debts. While the death benefit from a life insurance policy is typically tax-free, it is important to consult with your Future Proof adviser to ensure that your family life insurance policy meets your specific needs and requirements. The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

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Why is family life insurance important?

Family life insurance is a vital part of protecting your family’s financial future. Family life insurance pays out a lump sum to your loved ones if you die, so they can maintain their current lifestyle and pay any debts you may have left behind. If you have young children, family life insurance can also help to pay for childcare and education costs. And if you are the main breadwinner in your household, family life insurance can give your loved ones peace of mind that they will be able to maintain their standard of living if something happens to you. If you are a stay at home parent, family life insurance can help the remaining partner continue to work, whilst paying for childcare/ housekeeper.

There are many different types of family life insurance policies available, so it is important to shop around and find the one that best suits your needs.

But with the right policy in place, you can rest assured that your family will be taken care of financially if the worst happens.

Who needs family life insurance?

If you have children who are dependent on you for the roof over their heads and to put food on the table, you may want to consider life insurance in case something happens to you and your spouse. If you have relatives who rely on you financially, life insurance can help to ensure that they are taken care of when you die. In addition, if you have significant debt, life insurance can help your loved ones to pay off your debts if you die.

How does family life insurance work?

 Family life insurance is a type of life insurance that provides financial protection for your loved ones in the event of your death. The policy pays out a lump sum to your beneficiaries, which can be used to cover expenses such as funeral costs, outstanding debts, or everyday living expenses. To determine how much life insurance you need, consider your current financial obligations and the needs of your family. You can also speak with your Future Proof adviser to get more information.

Which is the best family insurance for me?

The best family insurance for you will be one that fits within your budget. Provides useful additional benefits included in the price. In addition, one that runs long enough for your children and spouse to be independent of you financially.

When should I take out a family life insurance policy?

As life insurance will cost more and more the older you become, it is advisable to take out a family life insurance policy at your earliest opportunity.  Not only does the risk of dying increase as you get older but with age come all manner of health conditions that may cause a life insurance premium to be raised.

Is a family life insurance policy worth it?

A family life insurance policy is a valuable financial safety net for families. While the death of a breadwinner is always a tragedy, it can be an especially difficult blow if there is no life insurance in place.

A life insurance policy can provide much-needed financial support to help cover funeral costs, pay off debts, and maintain a family’s standard of living. In addition, a life insurance payout can be used to fund a child’s education or provide other long-term financial security. Included within many family life insurance policies are additional benefits such as remote access to 24-hour private GPs. For these reasons, a family life insurance policy is worth considering for any UK family.

Who can I cover on a family life insurance policy?

Family life insurance policies typically cover the adults stated on the policy. Whether they be joint policyholders or single stand-alone policyholders. The benefit will not extend to the death of a child.

Are there different types of life cover for families?

There are four different types of life cover for families:

  • There is decreasing term life insurance, that covers a repayment mortgage. Whereby the amount insured reduces in line with the mortgage balance.
  • Level term cover that will cover both an interest-only mortgage and provide a lump sum should either parent pass away.  
  • Level-term cover also has an indexation option, that allows the policy sum insured to increase on an annual basis. This helps to offset the effects of inflation. Most policies can be arranged to increase in line with the retail price index, or in the case of some insurers, by a specific percentage eg 5 per cent per annum. 
  • Family income benefit, pays out an amount each month for the remainder of the term, instead of a lump sum. This can be useful when paying bills and in particular school fees. 
  • Although not technically considered life cover, critical illness cover should also be considered if you have a family. Many policies include cover for your children as a standard or an add-on. 

A qualified adviser will help you to decide which family life cover policy is most suited to your circumstances.

How much cover do I need for my family?

In order to assess how much life insurance you need for your family, your Adviser will ask you the following questions:

  • Mortgage – How much is outstanding? What is the remaining term of the mortgage?
  • Rent – How much rent do you pay per month? Also, consider how much your rent may increase in the future
  • Debts – What is the total amount owed and over what term?
  • Outgoings – regular monthly bills such as travel costs, utility bills, council tax, school fees, maintenance payments perhaps?
  • Family – How many children/dependents do you have? How old are they? And how long do you feel they will be dependent upon your income/care?

All of the above will help you build a picture of how much cover you need and for how long it needs to be in place. This can be a bit involved as they aren’t everyday questions, and you may need to do some research to find relevant information/paperwork.

If you are still unsure about whether you are insuring yourself at the right level, speak to one of our helpful advisers who can guide you and make suggestions that you may not have considered.

How much does family cover cost?

How much family cover costs, will depend on the following:

  1. What type of family cover you are applying for 
  2. Your age at the time of application
  3. Your weight – is it healthy are you overweight or underweight?
  4. Your lifestyle – do you smoke? Do you drink alcohol? Do you eat healthily?
  5. Your occupation – is it desk-bound or involve overseas travel, working in dangerous places eg at heights?
  6. How long does your policy length need to be? 
  7. What is your medical history? Any pre-existing medical conditions?
  8. What amount of cover do you need a modest amount of hundreds of thousands of pound worth?
  9. Do you have a family medical history in your parents/  siblings of MS or cancer?

All of these factors come into play when insurers arrive at a true premium. A quote calculator will give you a vague price but won’t take into consideration all of these factors as an adviser will. Making an adviser quote a far more accurate idea of what you will be likely to pay after your application has been assessed.

Frequently asked questions

  • We are often asked by our clients, who is the best provider of family life insurance. The simple answer is that there is no one best provider of family life insurance in the UK. Each person will be assessed individually and each insurer will have their own point of view when it comes to assessing their risk. For this reason, it is advisable to get professional advice from an intermediary who has the software and relationships to judge the ever changing landscape of insurers and their rates.

  • You can get a more precise quote on cover for your family by picking up the phone and speaking with a Future Proof adviser. 

    Any quote that your adviser provides you with will take into account your circumstances and medical history, as well as your budget.

  • It is advised that both parents should take out cover. Including those parents that do not work or work part-time. It is not just the loss of money that impacts a family when a parent dies. It is also the care and unpaid work that they carry out in the family duties.

     Imagine the cost of a nanny, taxi service and cleaner, all employed so that the main bread winner can carry on working as usual? Inflation has also raised these costs over time.

  • Whether you apply for a single or joint policy needs to be discussed with a qualified adviser. A joint policy will be cheaper as there is only one premium and one payout which happens at the first death, then the policy ends.

    Two single policies will pay out twice and as such will be more expensive in premiums. However, with two payouts it means that your children will be left with more of a financial buffer in life, if you can afford two single policies.

Can I take out multiple family life insurance policies?

Multiple family life insurance policies can be taken out to cover different aspects of family life. One for a mortgage, one to cover ongoing bills, and a family income benefit policy to cover school fees maybe.

As long as there is an insurable interest ( need) for the policies and you aren’t overinsuring yourselves and paying out too much in premiums, multiple policies are possible.

There are several generations in my family, can we all be covered?

Several generations in a family can get life cover, but only on a single policy or joint policy basis. A policy will not cover more than two people. Families can be complicated. Future Proof has experience in covering large families, extended families and blended families.

Is there a limit on how many people can be covered by a family policy?

There is a limit on the number of people who a family life insurance policy can cover. The options are single for one person or joint for two people ( but this will only pay out once).  

At Future Proof, we have covered many blended families and ensured that each is protected to the benefit of the entire family unit.

What happens if I extend my family?

If you extend your family, the best advice is to pick up the phone and have your cover reviewed by an adviser to ensure that it is still fit for purpose. It might be that you will need to extend the length of your cover or increase the amount of the cover. Any changes like these will mean you will have to reapply for new cover, as amendments to increase the term or sum insured can not be carried out on existing policies. 

Can I buy life insurance for another family member?

You will be able to buy life insurance for another family member. This is called a life of another policy. There are guidelines:

  • The person must be made aware that a life insurance policy is being taken out on their life
  • There must be an insurable interest ( need) as to why this policy is being taken out on the life of another. Eg divorce and the policy is there to protect any future maintenance payments from the main breadwinner.

Will my entire family need to have a medical to get a policy?

Your entire family will not need to have a medical to get a policy.

It will only be the people applying for the policy ( ie the policyholders) who may have to have a medical. If there are no medical disclosures and only a low amount of insurance is applied for, you may not even have to have a medical at all. Circumstances vary.

Will my family also be covered for critical illness?

If you apply for family life cover, your family will not automatically covered if you get a critical illness. If you have applied for a joint life and critical illness policy, this will pay out on the first event whichever that may be. It is worth checking your policy conditions to be sure or calling Future Proof who will be able to advise you. 

Who can receive the payout on my family policy?

When you have a family policy, you have the opportunity to name who you want the policy payout to go to. These people are called beneficiaries. If you would like the payout to go to your children but they are under the age of 18. The payout can be put in Trust to be looked after by a Trustee until they reach 18.

More information on Trusts can be found HERE.

Trusts are not regulated by the Financial Conduct Authority.

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Frequently asked questions about family life insurance payouts

  • The exact amount your loved ones will receive will depend on a number of factors, including the size of your family and the amount of cover you have. 

    If you’re the sole breadwinner in your family, it’s important to make sure that your life insurance policy is sufficient to cover your loved ones’ needs in the event of your death. A typical family life cover payout can help to cover expenses like mortgage payments, child care costs, and everyday living expenses. 

    It’s also important to consider how much debt your family would be left with in the event of your death. If you have a large mortgage or other outstanding debts, you may want to consider increasing the size of your life insurance policy to ensure that your loved ones are not left with a financial burden. 

    When choosing a life insurance policy, it’s important to work with an experienced adviser to make sure that you have the right amount of cover for your needs. Life insurance can give you peace of mind knowing that your loved ones will be taken care of financially if something happens to you.

  • You should definitely consider putting your family cover in Trust. 

    Here are three good reasons:

    1. Putting a policy in Trust makes it exempt from inheritance tax, as the money won’t sit as part of your estate
    2. The money is paid out more quickly
    3. The money goes directly to who it is intended

    The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances

    Trusts are not regulated by the Financial Conduct Authority

  • In the UK your family will not be taxed on the payout they receive if the policy is written in Trust.

    This is a service that Future Proof provide at no additional cost when you take out a policy through them. 

    Trusts are not regulated by the Financial Conduct Authority.

    The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

  • You should review your family life insurance policy whenever there is a change of circumstance.

    It is vital that any protection reflects your current circumstances to be totally effective. Consider a review when you have:

    • Moved house/ remortgaged
    • Given up smoking
    • Got married
    • Had a baby
    • Been divorced
    • Paid off your mortgage
    • Have suffered a serious illness
    • Received inheritance
    • Debt has increased or decreased

Will my children be taken off the family policy when they turn 18?

As they will likely be the beneficiaries of a payout, ensure that your policy runs long enough for them to be financially independent. Is 18 years of age old enough for them to be financially dependent or would age 21 or older be more fitting?