Family protection planning
Putting the right cover in place for couples, parents, single parents, and blended families. What matters, what's over-sold, and how to prioritise when budget is limited.
Family protection isn't just about death, it's about making sure that if a parent dies or can't work, the family can still pay the mortgage, put food on the table, send the kids to school, and generally carry on. That means a combination of life cover, income protection, and often critical illness cover, structured to fit the actual shape of the family.
What the right structure looks like depends on your situation: dual-income couple vs single-earner; children dependent for 5 years vs 20; renting vs mortgaged; existing employer benefits vs self-employed. This guide covers the main scenarios.
What good protection looks like for different families
Dual-income couple, mortgaged, young kids
Priority: joint or separate decreasing life cover over mortgage term; Family Income Benefit to replace each partner's income until kids leave home; critical illness for both. Total cost: typically £80-£180/month for comprehensive cover.
Single-earner couple with children
Higher priority on the earner's income protection (they're the sole source of family income). Non-earning partner also needs life cover, childcare and household work has significant economic value. Usually £60-£120/month.
Single parent
Income protection is critical, no partner to fall back on. Life cover arranged via Trust so payout goes directly to kids/guardian, bypassing probate. Consider critical illness. Will with guardianship clauses essential.
Blended family with stepchildren
Separate life policies for each biological parent, with payout to their own children via Trust. Wills must clearly specify inheritance and guardianship. Legal advice recommended alongside insurance.
Couple, no children, mortgaged
Simpler: decreasing term assurance over mortgage value, so the mortgage is paid off if either dies. Income protection for whoever has the higher income. Lower premiums than family scenarios, often £40-£80/month combined.
Older parents with adult children
Life cover mainly for inheritance tax planning and funeral costs (whole-of-life policies in Trust). Critical illness rarely affordable at 60+. Focus on estate planning rather than income replacement.
Trusts, wills, and structuring cover properly
Insurance cover alone isn't enough. How it's structured determines who receives the money, when, and whether it passes tax-efficiently. Three tools you need:
- Policies written in Trust. A policy in Trust pays out directly to named beneficiaries (typically spouse or children) without going through probate. Faster (days vs months), potentially no Inheritance Tax, and much less risk of the payout being delayed or going to the wrong person. We set this up at application, free, takes 10 minutes.
- A valid will. Without a will, intestacy rules decide where your estate goes, often not where you'd want. If you have minor children, appoint guardians in the will. Costs £150-£500 for a solicitor-drafted will. Essential for any parent.
- Lasting Power of Attorney (LPA). In case of mental incapacity. Separate from life insurance but critical if you're hit by illness rather than killed. Two types: Health & Welfare, and Property & Finance. £82 per LPA to register with OPG.
Together with good insurance, these three tools form proper family protection. Without them, your insurance may pay out late, to the wrong person, or with significant tax cost.
Frequently asked questions
What's more important: life cover or income protection?
For most families: income protection first (far more likely to be needed, you're more likely to be off sick than to die during working age). Life cover second, to provide a lump sum if the worst happens. Ideally both.
How much life cover do we need?
Rule of thumb: enough to clear mortgage + 10× the family-income partner's annual salary + expected costs to get the kids to 18. For a typical family: £300k,£500k per working parent.
Should policies be joint or separate?
Usually separate. Joint life policies pay out only once (first death). Separate policies pay out twice if both partners died. Cost is marginally higher but cover is much better.
Do the kids need life cover?
No. Children have no dependants and no income to protect. Child critical illness is included free with most family CI policies, pays a small lump sum if a child gets a specified serious illness.
What if one parent is at home looking after the kids?
They still need life cover. If they died, the earning partner would need to pay for childcare, housekeeping, and possibly reduced hours of work. Typically £100k,£200k cover over the years children are at home.
Can we use our employer-provided benefits instead?
If available, use them as the foundation, but they're rarely sufficient alone. Death-in-service is typically 2-4× salary; most families need 8-10×. Employer income protection (if any) usually covers 50% for 12 months only. Supplement with personal cover.
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