Life Insurance is a subject that I feel is really important to share. I have always had life insurance since I became a house owner. A policy was taken out by myself aged 23 which was a 25 year policy, it costs me £6 per month as I took it out at such a young age, but this cover does expire when I turn 48. I also have another policy linked to when I bought the house I live in, this is a 100k policy and is valid until 2033. This means that if I die the mortgage will be paid off in full. I welcome Gemma from Reassured to Mrs Mummypenny. She is here to share with you a guest post on what she’s learnt about life insurance since becoming a mum.
Over to Gemma
I am Gemma and after 4 years of being unemployed and raising my daughter full time, I decided it was time to get back into marketing and begin rebuilding my career.
It was more difficult than expected to get back into work after such a long sabbatical, but finally I received a lucky break at Reassured, the UK’s largest life insurance broker.
My knowledge of the life insurance industry was limited.
I had looked into getting life insurance when my daughter was first born, but was turned down for a number of outstanding medical implications due to the pregnancy.
Time passed, life got busy with a little one and the outstanding need for obtaining life insurance got buried in the back of my mind under the list of daily to-dos.
I really should have life insurance.
Why do I need life insurance?
If the worst were to happen and I was to die, not only would my daughter be left without the emotional support of her mum, but her and her father would likely have to move house and adjust their entire lifestyle.
As a stay at home parent, it had never occurred to me that my death would affect the family financially.
But as a full time carer for my daughter, my absence would require my husband to either reduce his working hours or put in place expensive childcare. Both of which would remove income from the monthly budget and potentially result in my partner not being able to afford the mortgage or day to day living costs.
Since returning to work, we have moved to a larger house and begun living to our means – increasing our monthly outgoings and recreational spending – after all, we now have two incomes as opposed to one.
However, this now means that my death would result in the loss of an entire full time income again resulting in the same, if not more significant, financial burdens as detailed above.
Why didn’t I have life insurance?
As I mentioned above, I was previously turned down for life insurance, reason number one. Therefore, I had never reapplied for a policy as I presumed that I would only get turned down again.
From working in the industry, I now know this isn’t the case.
It is very rare there is no life insurance option available to you.
Existing medical conditions can be written into your policy, the application can be postponed until medical diagnosis has been carried out and even in high risk circumstances, there are specialist insurers and teams which can help you find an insurance policy to suit your needs.
Also previously mentioned, daily life took over and my pursuit for life insurance was soon forgotten, reason number two.
As a young, healthy parent, it is easy to deny that you require life insurance. Hopefully I have already iterated why this isn’t the case and that actually, having life insurance as a parent is essential.
Reason number three, and possibly the most prominent reason I hadn’t taken out life insurance was the cost.
As a one income family, finances were tight. We could only afford to spend what we deemed to be essential. However, knowing what I know now, I would quickly add life insurance to the essentials list.
Saving money on life insurance
Second to its importance, the most significant thing I have learnt whilst working in the industry is that life insurance doesn’t have to be expensive and actually there are a number of actions you can take to make your premium payments as low as possible.
Here’s what I have learnt from working in the industry to help you get the most cost effective, yet suitable life insurance policy;
- Only take out the cover that you need
When taking out life insurance, it can be tempting to go for the highest level of cover possible. But as you can imagine, higher levels of cover lead to higher monthly premiums.
Consider what it is you are looking to cover – your mortgage? The day to day lifestyle of your loved ones? An outstanding debt you don’t wish to burden your loved ones with?
Work out how much you would need and request that level of cover to avoid paying for more cover than you require.
- Take out a joint policy
If in a couple, taking out a joint life insurance policy as opposed to two single policies can be cheaper.
There is a downfall to this as a parent though.
Joint life insurance only pays out once (usually upon first death). This means that if both parents die, the pay out sum attached may not be sufficient enough to cover the financial loss of both parents.
That said, if money is tight and it isn’t feasible to take out two single life insurance policies, it is best to have joint cover than no cover at all.
- Live a healthy lifestyle
As a parent, it is likely you have more than just this reason for living a healthy lifestyle – I know wanting to be a positive role model for my daughter was a driving force for me.
But factors such as smoking, substance misuse and being overweight not only increase your monthly premium payments, but can be easily altered.
Changing your behaviour can have a positive impact on the amount you pay each month.
Don’t be like me
It took going to work in the life insurance industry for me to realise just how important having life insurance was for my family.
Don’t be like me and live in a bubble, pretending it is just an unnecessary outgoing that you will probably never need. After all, our children are the single most important things in our lives, why wouldn’t we won’t to secure their future even if we aren’t around to see it.
This is a collaborative post.
