Life insurance for new parents

Life insurance pays out either a lump sum or regular payments of money when you die, giving your dependants, such as your children or partner, financial support after you’ve gone.

It’s especially important while your children are young, so you can be reassured that they will be financially looked after if you’re not around.

You can choose the type of life insurance that suits you: some will cover specific payments like a mortgage, rent, or childcare costs, while others will pay a lump sum of money.

 There are two main types of life insurance:

These run for a fixed amount of time, typically five, ten or 25 years, and only pay out if you die during the ‘term’ of your policy.

The most simple and affordable type of term life insurance policy is called ‘level’. This pays out a lump sum when you die. You can also buy ‘decreasing’ policies where the level of cover reduces each year (such as to match a repayment mortgage) or ‘increasing’ policies where it goes up to keep up with inflation.

These pay out no matter when you die if you keep up with your insurance premium payments.

These are more expensive than shorter policies and if you live longer than expected, you might end up paying more into the policy than you get out.

Life insurance policies only pay out if you die. So, if you’re worried about caring for your family if you fall ill you might want to consider income protection insurance or critical illness cover.

If you’re a single parent, life insurance is the peace of mind that your children will be looked after if you die.

If loved ones end up caring for your children after you’re gone, life insurance could pay them money for your children’s living costs. Or you might prefer a policy that would pay a lump sum of money to your children when they turn 18.

The amount of cover you’ll need depends on things like any debts you have, how much your mortgage or rent costs, what your current income is and how many children or other dependants you have.

How much your life insurance premiums will cost is affected by your current age, your health and lifestyle and your medical history. 

If you’re an expectant parent, you might want to use our Baby costs calculator to work out the sort of budget you’ll need for baby and child essentials. 

The cost of life insurance policies can vary, so make sure you shop around. A good place to start are price comparison websites but you might also want to use an insurance broker.

When buying life insurance, remember to read the small print so you know what is and isn’t covered. If you change your mind about a policy, you have 30 days from buying it to get a full refund.

If you already have a life insurance policy and you’re young and/or healthy, you might still save money by switching to a better deal elsewhere.

Once you get a life insurance policy you can cancel it at any time, but you’ll lose the protection. If you’re considering cancelling due to cost or affordability, it’s important not to cancel insurance you need – or to miss a payment. Instead, contact your insurer and tell them you’re struggling.