Guide to family life insurance

Statistically, nearly one in twenty children lose a parent before they finish full time education. Family life insurance is there to ensure you leave something behind to help your family financially, so they aren't left to pay off any unpaid debts (e.g. mortgages) or fend for themselves without any extra help.

Types of family life insurance

Family life insurance is basically a form of life insurance. There are different types of life insurance you can apply for, all with different pay out schemes and policies, so you'll have to dig around for the right provider and policy suited to your needs.

Usually, family life insurance works on the basis that you or your partner (if it is joint life insurance) will leave behind a lump sum payout to your dependants in the event of your death.

Level and term in family life insurance

There are two key terms for life insurance: term and level. Life insurance works on the basis that you only receive a payout if you die within a fixed period of the policy, e.g. 18 years (the term). After that time, no payout will be made and the policy will be null. The level is the amount you get, which doesn't vary, and is always a set amount.

When looking for family life insurance you should look at the policy as a whole but keep a close eye out for the kind of term and level you need. For example, if you're relatively young you might not benefit from a short term, and if you have a lot of financial commitments a higher level will be beneficial.

Is it worth it?

Family life insurance is especially worthwhile for anyone who has dependants and financial commitments. Even if you have a large family, if you have no financial obligations (or very little) then you may not benefit from family life insurance. Remember, you'll have to pay premiums each month or annually for your insurance and the payout may only be applicable for a certain term.

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