New Dads
Dads aren’t always the best at sorting out things like life insurance. Especially young dads which makes sense 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 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 twenties or thirties you can lock in low premiums for decades. Protecting your home, partner and most importantly your children.
Older Dads
As you age, the cost of life insurance generally increases 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. 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. 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 to 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.
Working Dads
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.
If you’re self-employed you won’t enjoy any benefit and the sole responsibility falls to you which can make self-employed workers even more financially vulnerable.
Extending Family
There are a number of scenarios where dads can change their life insurance without requiring additional underwriting. A special event option 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.
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. When determining the amount of cover you need, also take into account the effect of inflation on the payout.
How Long Do dads Need Cover?
As a dad, the length of your life insurance policy is usually determined by the age of your children and 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 are 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.
If you would like a complimentary review speak with an expert today.
