Many families think about what would happen if?

Life Insurance and illness protection is the ultimate in this question because of the impacts to them and their family if we get it wrong. 

Life insurance can pay a lump sum on passing away or diagnosed with e a terminal illness and yes there can be lots of additional features within this; but is it the most relevant and cost effective solution to support a family with children?

If we use the scenario of:

Mum & Dad with x2 children aged 5 and 7 years old. They have a £200,000 Mortgage at £800 per month for the next 20 years. Also lifestyle costs (utilities food etc) a further £800/m. Mum does not work.

Many families would look at a £350,000 Level life insurance policy if Dad was to pass away as the first step. If would always pay the Mortgage and some money for mum to support the children. However, dependant on the time of the event how much actually stability does that give Mum and children?

This is why many families are looking at a mix or life insurance with the life insurance product Family income benefit. Family income benefit is a life insurance protection which pays agreed amount of monies each month for a give period of time. We can also make this monthly amount of money raise with the cost of living (this is called indexation) so the monthly amount will still cover the bills in the future. Now the life insurance companies like Family income benefit because the further we get into the term the less they pay out but for family it is cheap as a monthly fee and actually covers the know bills. 

So in the above scenario the family could look at:

£200,000 level life insurance over the 20 years (always pays Mortgage and more dependant on the time of the event) with £800 per month for 16 years (£9600 per year of income x 16 is £153,600 income). Meaning, in the event of claim Mortgage is paid and the children have the financial support till youngest is 21 years. The good news is this usually works out cheaper for even more relevant Life insurance – most families like that idea!

Golden Rock Solutions is here to support families with free information to get more out of life insurance and illness protection. Get in touch to review your protection or look at ideas to protect your family.

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