There is no hard and fast rule, but financial security for your family at a bare minimum means somewhere to live and financial support until they become independent.
What is financial independence?
When your children are young, they look to you for everything.
As they grow and reach university age, they still need your support and when they leave full time education, they want a step onto the property ladder. Only then, when your children are in full time employment and have their own home, can you consider your job over. Except, it usually starts all over again with your grandchildren.
What Do You Need to Do Today to Make All the Above Happen?
Firstly, you need to think about the worst-case scenario. If you are unable to provide for all of your children’s needs as they grow, what can you do?
Through either death or incapacity, you may not be able to do all you want for your children. According to the Childhood Bereavement Network, a parent dies leaving a child approximately once every 22 minutes in the UK.
Life insurance is a very affordable way to clear your outstanding mortgage and provide enough financial security to see your children through to adulthood. Even if you have no mortgage, life insurance is available to ensure your children have a roof over their heads by covering rent payments until they grow old enough to care for themselves.
How is Life Insurance Paid to Beneficiaries
The insurance payment usually arrives for your family in a lump sum, but you can state how you would like your family to benefit from the monies. Mortgage or rent payments feature high on the list of priorities for parents.
You can also leave your insurance payments in trust, which means the lump sum is unaffected by inheritance tax. You may not have substantial equity in your property today, but over the lifetime of your policy, equity can grow, so you can place your policy in trust rather than see your family face an inheritance tax bill in the unfortunate event of your death.
How much is life insurance?
This varies based on your lifestyle, so insurers tailor it to suit your needs. Get some example life insurance quotes here; it takes less than five minutes.
Critical illness cover is also useful to ensure you do not become a burden on your family if you are alive, but unable to provide for your family. As the name suggests, critical illness cover will pay out a lump sum if you have a serious diagnosis.
Some life insurance policies include critical illness cover. If you have a history of ill health, you may be better off getting a standalone policy. If you are in your forties, many critical illness policies provide cover without any medical checks. Speak to one of our advisors to learn the best option for you on 0800 862 0949.
© ActiveQuote Ltd. 2017