My wife and I are considering getting life insurance as we are trying for our first child.
At 49, I am 15 years older than my wife, and have heard that life insurance starts getting a lot more expensive once you hit 50.
Is this true and is it better for me to start a policy now rather than waiting until we have children? How about my wife? Is it better for us to look for policies separately because of the age gap, or should we consider a joint policy?
We both work full-time and own our property, with a 55 per cent mortgage.
Some providers offer free life insurance up to £15,000 when you have your first child
Kathryn Knowles from specialist life insurance broker Cura said: I am going to start by giving a really unhelpful answer to this question – it depends.
What stands out is this couple have a mortgage and don’t have life insurance already.
It is standard that anyone with a mortgage and a partner and/or dependants should consider life insurance – the main reason being most people would want their family to be able to pay off their mortgage and continue living in the family home if they were to die.
After all, losing a loved one is bad enough without having to face the fear of how you will make the mortgage payments.
Getting the right insurance to cover your mortgage
For a joint capital repayment mortgage, where you are repaying the balance and not just the interest, you usually start with a decreasing life insurance policy, but really this is the minimum that you want.
Kathryn Knowles, managing director of specialist broker Cura
It is possible to look at level cover, increasing life insurance or even a policy that pays a monthly income (known as family income benefit), each of which can have a lot of benefits for additional family protection.
It all comes down to a balance of what you need, what you want and the budget that you have.
It’s also worth noting that if you happen to have an interest-only mortgage that an level life insurance policy is likely more appropriate.
What I would say straight away is not to wait to have children to put some life insurance in place, not simply due to the fact that it may cost more to buy when you are older, but because the surviving partner will benefit from the cover.
It can sometimes be better to lock your premium levels into place as young as you can, and also – it may seem a tad melodramatic – but you never know what is around the corner and if you develop any health conditions in the future these could affect the insurance premium much more than your age will.
What to do when the baby comes along
When you do you have a child, the last thing you may think about is insurance and that is completely understandable. Once things have settled, it is a good idea to look at insurance options.
It may be that you decide to put some additional life insurance in place so that if something happens to you, your partner or a guardian can financially look after your child until they reach an age of independence.
This is often done through a level or increasing life insurance policy or through family income benefit which is a type of decreasing life insurance.
At the moment there are some insurers that offer new parents free life insurance for a year. I have done this with all three of my children, and while it sounds too good to be true, it is true.
Both Aviva and Royal London through the Post Office offer £15,000 of life insurance for free, for any parent of a child under the age of 4.
This lasts for 12 months and it is a really simple online form to fill in. As with anything like this, please do always check any eligibility criteria that you see on the forms.
Many workplaces offer a benefit which pays out a lump sum on the death of an employee
Check any cover you may have through work
You are both working full-time so it is definitely worthwhile checking with your employers to see if they provide any employee benefit packages. This could include death in service cover and/or enhanced sick pay.
Having death in service through work, means that your employer is offering what is sometimes known as group life insurance. Essentially staff have access to some life insurance based upon either a set figure or a multiple of your salary.
If this is available it can be used to help you decide what insurances that you need, but I wouldn’t think of this as a complete solution to your life insurance needs. You could change employer to one which may not offer this benefit or your employer could remove it if it is not a contractual requirement of the employment.
I would suggest that it is worth looking at personal life insurance, even if you do get this cover through work, if you can.
Don’t be tempted to automatically go with the cheapest provider. It may be that they are the best for you, or the only one that fits your budget and that is fine.
But some insurers offer what is known as value added benefits that are often worth considering. Recently, I was advising a client and they agreed with me to not go with the cheapest option, but one that was 30p per month dearer.
This extra £3.60 a year gave them access to remote on-demand GP services 24/7, specialist nurses and expert second medical opinion services. I have used most of these services myself and I have found them invaluable for me and my children.
Will Kirkman of This is Money adds: As you mentioned, life insurance policies can be taken out on a joint or an individual basis.
It’s worth comparing costs on both, as separate policies can sometimes work out cheaper for a couple – or often only a little more expensive. Advisers will nearly always argue for taking two single life policies as if something terrible happens and on partner dies, the other is left uninsured. If you both die, both policies pay out.
Premiums are calculated depending on your history, health and age, among other factors
By contrast, a joint policy will typically only deliver one payout on the first person’s death. This combined with the age difference you mentioned might make individual policies more sensible.
Looking for life cover?
This is Money has teamed up with Cavendish Online to offer our readers the cheapest life insurance quotes available on the market.
You can get a fully underwritten quote online yourself, or speak to a fully qualified independent adviser who can compare life insurance and recommend the best option for you from a wide range of insurers.
Your policy is likely to cost slightly more when you are 50 than when you are 49 – but that cost has been ticking up for most of your life, that’s just how it works.
You may have the idea that it jumps up once you hit the 50 threshold because you have heard of ‘over-50s life insurance’.
This is a more specialised type of whole of life cover aimed at those in their middle and later years. It’s designed to cover things like credit card bills and funeral costs when you pass away. Generally, it’s expensive.
If you’re after standard term insurance, which covers you for a specific length of time, then the extra year shouldn’t affect the cost too much.
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