Why (most) dads need life insurance

From our experience at Reassured, there are certain major life events which trigger us to take out life insurance.

These commonly include:

As a proud dad myself, the day our first child entered the world was the prompt I needed to put in place financial protection for my loved ones.

After all, the average cost of raising a child to 21 in the UK is estimated to be an eye-watering £231,713[1].

When you consider 111 children are being bereaved of a parent every day in the UK[2], it becomes clear, for most dads, life insurance is imperative.

But did you know you could secure financial protection for your loved ones for less than the costs of 2 pints a week?

Choosing the right policy will depend on your age and personal circumstances, as no two dads are the same.

Let's look at the various life insurance options available...

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Life insurance for new dads

Dads are not always the best at seizing the day and sorting out things like life insurance.

…and young dads tend to be the worst of all.

This makes sense to an extent as statistically the younger you are, the healthier you are and the longer you have to live.

However, this actually presents a great opportunity and is often the best time to take out life insurance.

Why?

Because the younger you are the cheaper your monthly premiums, as the risk you pose to insurers is low.

By taking out life insurance in your 20s or 30s you can lock in super-low premiums (from as little as 20p-a-day) for decades to come.

Protecting your family home, partner and most importantly your children.

Life insurance for older dads

As you age, the cost of life insurance generally increases. This is because you pose a greater risk to insurers.

It's not uncommon these days for men to become a new dad in their 50’s or even 60’s.

At this stage of life, traditional level and decreasing term-based cover become very expensive.

However, other policy options are available; namely over 50 plans and whole of life insurance.

When you reach your 50s often you have paid off a large proportion of the mortgage and secured management positions.

As a result, your requirements change and the policies which insurers offer change too.

Over 50s plans provide a much lower sum assured, usually up to £25,000.

Whilst this is not enough to cover a mortgage debt, it could pay for your funeral and/or provide an inheritance for your children.

If you've older children, this could be a godsend as the average cost of dying is estimated to be over £9,400[3].

A key benefit of over 50 life insurance is that you don’t have to answer any medical questions and acceptance is guaranteed if aged 50 - 85.

The other option for older dads is whole of life insurance. Here it’s possible to secure a greater sum assured, however you'll have to answer medical questions to satisfy the insurer.

Both options are forms of life assurance, guaranteeing a pay out when you pass away (not if you pass away, as with life insurance).

Life insurance for dads who work

Dads who are employed often enjoy some form of cover through their employer.

Commonly this benefit takes the form of death in service.

Generally, this will provide loved ones with approximately 3x your annual salary should anything happen to you.

Whilst this is a great perk, if you have a sizeable mortgage and/or young children it’s unlikely to provide the required long-term coverage to negate the need for personal life insurance.

Also, these employee benefits don't travel with employees. So, if you were to change jobs you would lose this benefit.

What you can do is factor this protection into the level of personal cover required, reducing your sum assured and premiums.

Lastly, if you’re one of the 4.8 million[4] people in the UK who are self-employed, you’ll not enjoy this benefit and the sole responsibility falls to you.

This can make self-employed workers even more financially vulnerable.

Life insurance for stay-at-home dads

It’s a common misconception that stay-at-home dads (and mums) don’t require life insurance as they don’t earn a salary.

In reality, this could not be further from the truth.

If you’re a stay-at-home dad take a minute to consider all the unpaid jobs you undertake:

  • Childcare
  • Taxi service
  • Chef
  • Cleaner
  • Gardener
  • Food shopper
  • Mechanic
  • Homework tutor

Now, uncomfortable as it may feel, think about how you would replace these roles if you were no longer around.

Take childcare for example. The average cost of full-time childcare is £223.36 a week, per child[5].

Could you afford these significant ongoing fees?

If not, would your partner need to give up work or reduce their hours? But then where would the money be coming in?

Life insurance can provide the answer, by paying out a lump sum if the worst were to happen.

From 20p-a-day, life insurance can provide cover, protecting your family whatever the future may hold.

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Life insurance for single dads

Unfortunately, it's a fact of life that some relationships break down.

However, even after a separation, single dads still have a responsibility towards their children; family living costs and mortgage repayments.

If you have joint life insurance with an ex-partner, depending on the nature of the break-up, you may want to cancel this policy.

You can then take out a new single policy.

If you share children, it's usually a good idea to liaise with your ex-partner to ensure that between you, your children are adequately protected.

Life insurance for dads-to-be

For all you proactive dads-to-be out there why not secure your life insurance before the baby arrives?

Let's face it after your little one arrives; you'll have much less spare time (and you’ll also be sleep deprived).

Remember the younger you are when you take out cover, the cheaper your premiums.

Secure the financial future of your growing family before the birth, and then focus on your little bundle of joy.

Reassured in the knowledge your family is financially provisioned for whatever the future may hold.

Extending your family

There are a number of scenarios where dads can change their life insurance without requiring additional underwriting.

Some insurance providers offer a special event option which encompasses events such as having more children or taking out a bigger mortgage.

The cover amount can be increased to account for the larger amount of protection required.

This increase will, however, be reflected in the cost of your premiums.

If you want to have more children, remember to consider your policy and whether you have enough coverage in place to meet your changing circumstances.

Dads who smoke

17% of men currently smoke in the UK, compared to just 13% of women[6].

If you’re a dad that smokes, because of the associated health risks, you'll pay more for your cover.

However, this doesn't mean that you can’t secure affordable life insurance.

What it does mean is that you should compare a wide range of quotes to find the best possible deal.

Never lie about your smoking habits on your application, as it could render your policy invalid and your investment will have been wasted.

If becoming a dad has given you the motivation to quit (securing cheaper premiums) you can find support here https://smokefree.gov/
Compare Dad's Life Insurance » Find Your Best Quote

How much life insurance do dads need?

Once you’ve established which policy type best meets your needs, you’ll need to calculate how much cover you require.

If you're solely looking to cover a mortgage this will be obvious; you would secure a sum assured to mirror your remaining mortgage.

However, if looking to cover family living costs too, you would need to factor in your regular outgoings as well as any new costs which may arise after your passing.

Existing costs might include:

  • Monthly mortgage repayments or rent payments
  • Daily living expenses (food, clothing, leisure activities)
  • Household bills (gas, electricity, water, council tax, tv license, broadband)


New costs arising as a result of your passing might include:

  • Funeral costs
  • Legal fees
  • Loss of household income due to reduced working hours
  • Additional childcare costs

When determining the amount of cover you need, also take into account the effect of inflation on the pay out.

How much life insurance do you need?

Enter your financial commitments to understand the level of cover you require.

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£121,687 is the estimated average outstanding mortgage per household in the UK.

Our property is generally the largest financial commitment any of us will make.

Your life insurance should cover this significant debt should you no longer be around.
£
?

According to Money Advice Service, full-time childcare in the UK now costs £242 a week.

The loss of a parent could result in the need for additional childcare whilst the surviving parent increases their hours to account for lost income.

Your life insurance cover should factor in this additional required outgoing.
£
?

The average level of debt (minus a mortgage) in the UK is £15,385.

Factoring in any outstanding debts in your name when arranging life insurance ensures this burden is not passed to loved ones.
£
?

You may wish to leave your loved ones an inheritance or lump sum gift upon your passing.

Factoring in the gift amount when arranging your cover will ensure the pay out amount will be sufficient to provide your loved ones with this selfless gesture.
£
?

According to SunLife, the average cost of a UK funeral is now £4,417, whilst the total cost of dying is £9,493.

This is a 130% increase over the past 16 years and shows no signs of slowing down.

A significant cost which should be factored into the amount of life insurance you secure.
£
?

If you are one of the 65% of the UK who are lucky enough to have savings, this could be used as protection if you were to pass away.

Any pay outs from existing life insurance policies and investments can also be used as financial protection for your loved ones if you were no longer around.

Factor this into your required cover amount.
£ -

Your total cover estimate

£ 0

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How long do dads need cover?

As a dad, the length of your life insurance policy is usually determined by two key factors:

  • The age of your children
  • The length of your mortgage

If taking out a decreasing term policy to protect your home, generally you would select a term to mirror that of your mortgage.

This would ensure that if you were to die before your mortgage was cleared, your family would be able to remain in their home without worrying about money.

Alternatively, you may choose to use the age of your children to decide the length of your policy.

When looking to secure the financial future of your kids, your policy could align with the length of time until they’re independent.

It’s also important to consider whether your children will go to university, therefore extending the age at which they’ll reach financial independence.

Writing your life insurance in trust

A great way for dads to maximize their investment in their family's future is to write your policy in trust.

The main benefits of writing your life insurance into trust include:

  • Avoiding/reducing 40% inheritance tax, (above the £325,000 threshold)
  • Avoiding probate, (for a faster pay out)
  • Having greater control over who receives the proceeds and when

At Reassured we're able to offer a free trust service on the majority of the policies we arrange.

We can help you through the application process and are also on hand to answer any questions you may have.

How dads can save on monthly premiums

The best way to secure the most cost-effective life insurance policy is to compare multiple quotes.

As a result of different underwriting processes, costs can vary significantly for the same level of cover.

So it's really important to compare quotes from a range of different insurers.

At Reassured, we can compare quotes on your behalf completely free of charge.

It's also important to make sure you don't overprotect yourself or have an unnecessarily long term as this will inflate premiums.

If you're a dad reading this post without life insurance, why not let us help you protect your loved ones today?

Life Insurance Quotes for Dads » Find Your Cheapest Policy

Sources:

[1] https://themoneycharity.org.uk/money-statistics/september-2017/

[2] https://www.childbereavementuk.org/death-bereavement-statistics

[3] SunLife (2020), Cost of Dying Report, sunlife.co.uk/costofdying2020

[4] https://www.statista.com/statistics/318458/united-kingdom-proportion-of-self-employment-by-gender/

[5] https://www.moneyadviceservice.org.uk/en/articles/childcare-costs

[6] https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/bulletins/adultsmokinghabitsingreatbritain/2017

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