Many new experiences come your way as a new parent. From joy to sleep deprivation – and all things in between. Financial responsibility is another thing to add to the pile, because you’ve just gained a brand new financial dependent.

This is why becoming a mum or dad is a common trigger for buying life insurance. As a parent, your financial landscape is no longer just about supporting yourself, but about feeding and clothing a new dependent – now and long into the future. The costs associated with raising a child are significant, and they don’t go away if something unfortunate happens to you. That’s why life insurance should be on your radar if you’re a new parent.

What is life insurance?

Life insurance is an insurance policy that pays out a tax-free lump sum if you die while covered by the policy. In return for this financial protection, you’ll pay monthly premiums to be insured. As we’ll explore, life insurance can protect your surviving family when they need it most. Read more about how life insurance works.

Why do parents need life insurance?

For any parent, the idea of you dying is unthinkable. Even worse is the idea that the children you leave behind wouldn’t have enough money to live on. Your children naturally depend on your income, so a lack of life insurance could leave a financial shortfall for your family. By taking out life cover, you’ll have peace of mind in knowing that should the worst happen, your family’s financial future is secure.

What can a life insurance policy cover?

Being a mum or dad is the best job in the world – but it’s not exactly cheap. Life insurance can be there to help pay off debts, like a mortgage, but it can also make sure your family can keep up with the cost of life (without having to significantly change their lifestyle). When thinking about what life insurance can cover as a new parent, consider all the things your child will need before they become financially independent. These costs can include:

  • Childcare – nursery, childminder or nanny fees come at considerable cost in those early years
  • Rent or mortgage – your family will need enough money to keep a roof over their heads without your income
  • Household bills – utilities like water, gas and electricity will still need to be paid
  • Education costs – from after-school tutors, uniforms, books and school trips to private school or university fees (if applicable)
  • Guardianship – in the absence of another parent, a life insurance cash sum would provide your chosen guardian with the money they’d need to provide for your children
  • Hobbies and activities – children have a life outside of home and school, but whether they’re into music, sports or other recreational activities, the money all adds up

Ask yourself: if you were no longer around, could your family keep paying for all the above? A life insurance payout would make sure your children could maintain their current living standards without you.

When to buy life insurance

If you’re in good health, the earlier you take out life insurance, the cheaper your premiums will be. Life insurance policies are based on risk and, as you age, your likelihood of dying increases (grisly but true) – which means a greater chance of an insurer having to pay out.

If you don't already have life insurance, becoming a parent is a sensible time to take it out. You can always adjust your cover in the future if you go on to have more children – or you can factor that in as you take out a policy. If you're super organised, you might even get your life insurance sorted during pregnancy.

Time to protect your young family with life insurance? To start, select your age:
  • Becoming a parent means increased financial responsibilities that life insurance could protect if you died
  • A life insurance payout could make sure your children are provided for without you and your income – covering things like childcare, education and housing costs
  • It's a good idea to get life insurance as soon as you become a parent, because your financial liabilites have changed, and because life insurance is cheaper the sooner you buy it
  • You can change your cover level in the future if you go on to have more children, or factor your future family plans into the cover you take out initially
What is life insurance?
An insurance policy that pays out a tax-free lump sum to your partner or family if you die. It’s designed to make sure your loved ones would be financially secure without you and your income.
Who needs life insurance?
Anyone who has financial dependents. In other words: other people who rely on your income. If you have a partner or children who’d be financially affected by you dying, you should consider having some life insurance in place.
How much does life insurance cost?
Life insurance is often very affordable, but the cost differs per person. This is because it depends on the cover you buy and how much of a risk you are to insure (based on your age, health and lifestyle). It’s cheapest when you’re young, fit and healthy.
Does life insurance always pay out?
Life insurance will pay out if you die while you’re insured and you were honest about your health when you applied. It won’t pay out if you die after your policy runs out or you cancel your policy – and might not if you meet an exclusion (e.g. many insurers exclude death by suicide within the first year of taking out the policy).
Is it easy to claim?
Claiming on a life insurance policy is straightforward – your partner or family simply claim directly with your insurance company. Making sure they know about your policy and have the details in case the worst happens can be helpful.