My wife and I are considering getting life insurance as we are trying for our first child.
At 49, I’m 15 years older than my wife, and I’ve heard that life insurance starts to get much more expensive once you reach 50.
Is this true and is it better for me to start a policy now than to wait until we have children? What about my wife? Is it better for us to look at the policies separately because of the age gap, or should we look at a joint policy?
We both work full time and own our property, with a 55 percent mortgage.
Some providers offer free life insurance of up to £15,000 when you have your first child
Kathryn Knowles of life insurance broker Cura said: I’ll start by giving a really unhelpful answer to this question – it depends.
What stands out is that this couple has a mortgage and doesn’t actually have life insurance.
It is typical for anyone with a mortgage and a partner and/or dependents to consider life insurance—the main reason being that most people would like their family to be able to pay off their mortgage and continue living in the family home if they die.
After all, losing a loved one is bad enough without having to go through the fear of how your mortgage payments will go.
Get the right insurance to cover your mortgage
For a equity repayment mortgage, where you pay off the balance and not just the interest, you typically start with a diminishing life insurance policy, but that’s the minimum you really want.
Kathryn Knowles, Managing Director, Quora Specialist Broker
It is possible to look at level coverage, augmented life insurance or even a policy that pays a monthly income (otherwise known as family income benefits), each of which can have a lot of benefits for additional family protection.
It all comes down to the balance between what you need, what you want, and the budget you have.
It’s also worth noting that if you have an interest-only mortgage, a life insurance policy would probably be more appropriate.
What I would say right away is don’t wait to have kids to put on some life insurance, not only because of the fact that the purchase may cost you more when you’re older, but because the surviving partner will benefit from the coverage.
It can sometimes be best to pin your premium levels as small as possible, too – it may sound a little melodramatic – but you never know what’s around the corner, and if you develop any health conditions in the future, it could impact your insurance premium much more than Your age.
What do you do when the baby comes?
When you have a baby, the last thing you might think about is insurance and that’s totally understandable. Once things are settled, it’s a good idea to look into insurance options.
You may decide to put some additional life insurance in place so that if something happens to you, your partner or guardian can take care of your child financially until they reach the age of independence.
This is often done through the level or increase of the life insurance policy or through family income benefits and is a type of diminishing life insurance.
Currently, there are some insurance companies that offer new parents free life insurance for a year. I’ve done it with my three kids, and while it sounds too good to be true, it’s true.
Aviva and Royal London through the Post Office offer £15,000 free life insurance to any parent of a child under the age of 4.
This lasts for 12 months and is a simple online form to fill out. As with anything of this nature, please always check any eligibility criteria that you see on the forms.
Many workplaces offer a benefit that pays a lump sum upon the death of an employee
Check any cover you may have with work
You both work full time, so it’s definitely worth checking with your employers to see if they offer any employee benefits packages. This could include a death in service coverage and/or an increase in sick pay.
Having a death in service through employment means that your employer offers what is sometimes known as group life insurance. Essentially, employees have access to some life insurance based on a set number or multiple of your salary.
If this is available, it can be used to help you decide what types of insurance you need, but I wouldn’t think of this as a complete solution to your life insurance needs. You can change your employer to an employer who may not offer this benefit or your employer can remove it if it is not a contractual condition of employment.
I would suggest it’s worth looking into personal life insurance, even if you got that cover through work, if you can.
Don’t be tempted to automatically go with the cheapest provider. This may be the best one for you, or the only one that fits your budget and that’s fine.
But some insurance companies offer what are known as value-added benefits that are often worth considering. Recently I was advising a client and they agreed with me not to use the cheapest option, but it was 30p a month.
This extra £3.60 per annum gave them access to 24/7 on-call remote GP services, specialist nurses and expert medical second opinion services. I have used most of these services myself and have found them invaluable to me and my children.
Of this money, Will Kirkman adds: As I mentioned, life insurance policies can be obtained on a joint or individual basis.
It’s worth comparing the costs on both, as separate policies can sometimes be cheaper for a married couple — or often just a little more expensive. Counselors will almost always argue for taking two single life policies as if something terrible happened and one partner died, leaving the other without insurance. If you both die, both policies pay out.
Premiums are calculated based on your history, health, and age, among other factors
By contrast, a joint policy usually makes only one payment upon the death of the first person. This plus the age difference you mentioned might make individual policies more sense.
Your policy will probably cost a little more when you’re 50 than when you’re 49—but that cost has been building up for most of your life, and that’s exactly what happens.
You might have an idea that it jumps as soon as you hit the 50 threshold because you’ve heard of “life insurance over 50.”
This is a more specialized type of whole life cap aimed at those in their mids and later years. It’s designed to cover things like credit card bills and funeral costs when you die. In general, it is quite expensive.
If you’re after standard term insurance, which covers you for a set period of time, the extra year shouldn’t affect the cost too much.
You can read our comprehensive guide to life insurance by clicking here.
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