Protection: Is there really any excuse for being a parent and having no life cover?

Protection & insurance

iStock_000016395581SmallMost parents would agree that having children has changed their perspective on life.

It also changes our financial priorities; no longer do we just have ourselves to look after, our children will be financially dependent on us for many years to come.

Why then do so many parents put the financial future of their children at risk, by not putting plans in place to provide much needed security in the event that one, or both, parents die.

Over 50% of parents have no Life Cover

A recent survey by Legal & General revealed the stark realities when it came to the attitude of parents towards protecting their family.

All of the people surveyed had dependent children, however only 49% have taken out any form of Life Cover.

That’s despite 66% of people saying it was their highest financial priority.

Why don’t parents take out Life Cover?

The survey also asked parents why they had not taken out Life Cover, the top reasons were:

  • Can’t afford it 42%
  • Not well informed 25%
  • Don’t believe it is necessary 13%
  • Housing situation (e.g. renting) 20%

Interestingly, the most popular reason for taking out Life Cover was buying a home and not having children.

So, of all the reasons given for not taking out Life Cover, which ones are valid and which are just excuses?

Can’t afford it – Excuse (for most parents)

With wage growth almost non-existent, times are undoubtedly tough for many families, but Life Cover is surprisingly affordable.

The table below shows just how cheap it can be for a non-smoking couple to buy £250,000 of Life Cover over a typical 18-year term on a joint life basis:

[table id=1582 /] 

It’s clear that for most parents Life Cover isn’t prohibitively expensive.

Remember too that we’ve shown the cost of buying £250,000 of cover; of course this could be reduced, pushing down the cost and making it even more affordable.

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For most people it’s a matter of priorities; where would you rather spend your money?

Not well informed – Excuse

Life Cover is possibly the simplest of all financial products; it pays out if you die and doesn’t if you don’t.

All you need to decide is how much cover you take out, how long you want it to last and which insurer to buy it from.

With the huge amount of information now available online being poorly informed about the options really is just an excuse. Although, it would perhaps explain why so many parents believe Life Cover is too expensive.

Don’t believe it is necessary – Excuse (usually)

Some parents, although they are in the minority, will have sufficient capital and assets to make Life Cover unnecessary.

But most parents won’t have this luxury and the only way a meaningful lump sum can be provided if they die, is by taking our Life Cover.

There is of course the old excuse that “it won’t happen to me”, which is probably true, most parents don’t die whilst they have dependent children. But it is possible and the financial consequences to the children affected, not to mention the emotional ones, could be catastrophic.

Housing situation – Excuse

The Legal & General survey found that buying a house was a bigger motivation for taking out Life Cover than having a family.

If you are a homeowner, with a mortgage, it’s vital that both your mortgage and your family are protected against the consequences of early death. If you die, your family will need somewhere to live and if mortgage payments cannot be maintained, the lender will ultimately be forced to repossess your home.

The same is true if you live in rented accommodation. The landlord will require rental payments to be kept up to date; indeed it’s possible a private landlord might be less forgiving than a mortgage lender.

It’s all about priorities

Clearly some people have no spare cash each month and cannot make any changes to their outgoings to allocate even a small amount of money towards the cost of Life Cover.

However, for everyone else all the other reasons are simply excuses; Life Cover can be very affordable and there really is no reason to be uninformed these days.

What’s more, if you have dependents, making sure they are financially secure if the worst happens, has to be the responsible thing to do.

We’re here to help

If you have children and would like help setting up Life Cover to make sure they are protected should you die, we’re here to help.

Our Independent Financial Advisers can advise you on the amount of Life Cover you need, explain how the policy should be set up and find the cheapest insurer for you.

But, you need to take the first step, if you think you should be doing more than you are to protect your family then get in touch with one of our team today.

Call us on 0115 933 8433, email or complete our online enquiry form by clicking here.