For the majority of us we should seriously consider getting or adding to life cover when we have children. It is a very sad fact that 4 women will become widows in the UK every day. Each year 25,000 people between age 18 and 50 will die.
For those of us with dependent children who are unfortunate enough to be put in this situation, we will not receive a great deal of financial assistance from the state. A widowed parent with one dependent child can receive the Widowed Parent’s Allowance and Child Benefit. This will provide a maximum of £112.55 per week, and is now paid whether the Mum or Dad dies, or a Civil Partner. You can get this benefit until you stop qualifying for Child Benefit. However the value of the benefit depends on the National Insurance contributions of your partner.
Of course this doesn’t apply to Single parents who will be expected to attend interviews to “encourage them back to work” although in practical terms there must be a question mark over how this works. The emphasis is shifting to making us as individuals plan for life’s uncertainties.
Isn’t Life Cover just a waste of money?
So, do we need life insurance??
The answer is, probably.
Company pension schemes often provide some life assurance and widow or widowers pension. You should check out exactly what is on offer from your pension and your partners pension. Most company pensions only provide life cover whilst you are working for the company.
If you stop work you must check whether you are entitled to life cover whilst you are not working. Many people also have life cover to repay the mortgage in the event of death. But this type of cover will not provide money to buy even the basics like food and clothes.
You should think about the impact that losing a salary would have and perhaps whether you should be thinking of the insurance as being there to cover school or college fees if one partner was not around.
Isn’t it complicated to get Life Cover?
It is possible to buy life insurance from a number of different insurance companies. This is now much simpler than it used to be. In many cases you can do this over the phone or online.
If you are in good health you are unlikely to have to have a medical. The real good news is that the cost of life insurance has fallen by up to 50% in the last few years. There are still big differences in the cost of cover between the various banks, building societies and insurance companies. Even some of the new companies are not the most competitive, relying instead upon their heavy marketing to bring their insurance to your attention. So do shop around.
Perhaps one of the easiest ways of doing this is by using an independent financial adviser (IFA). An IFA will make comparisons between the major insurance companies for you.
Be aware though that IFA’s do not get commission from the likes of Virgin Direct so they may not give you a comparison against companies such as Virgin. However, it does make it easier for you to make just one or 2 calls rather than the 45 plus insurance providers in the UK.
Last updated Jan 2016. More details: https://www.gov.uk/widowed-parents-allowance/eligibility