Death in Service vs Life Insurance
Question asked by Greg Reeve
Having had our first child we are looking at our Life Insurance options. Are we able to take out a joint policy to cover both of us or do we each need our own?
Most insurers offer a Joint Life Insurance policy on a first death basis only. This means that it will pay out just once and expire when the first partner dies.
Although this can work for couples with no dependents, this may not be the best solution if you have or plan to have children because it will leave the remaining partner with no life cover.
While the surviving partner could then take out another policy later in life, your age and potentially state of health will significantly affect the cost of the premiums.
We often recommend that parents take out two single policies. This is because the price difference per month is marginal and you will both be fully covered. Here is a price example for you. Based on Mike and Sarah, a couple who are both approaching 30 years of age, seeking cover £143,000 for 23 years:
That’s only £4.57 per month more for twice the cover that will pay out once on each death.
There is a lesser known Life Insurance product which is specifically designed for parents wanting to protect their family’s standard of living.
Rather than paying a lump sum should a death arise, Family Income Benefit pays a monthly income until an age at which you believe your children should be financially self-sufficient. This is often set to an age of 21 or 23.
Family income benefit is the most cost-effective way of maintaining your loved ones’ standard of living should the worst happen, offering lower like for like premiums than either decreasing or lever term life insurance.
We can help you to find the best Life Insurance policy, just give us a quick call on 02084327333.