Peace of mind – that’s what families need. If you’re planning for the future, your children’s future, or looking to expand your family, life insurance is the reassurance you need that your family will be financially protected, should the worst happen.
With life insurance in place, your spouse and children are guaranteed financial support if you pass away.
In this guide, you’ll find everything you need to know about family life insurance, types, costs and what you’ll need to do when you take out a policy.
The information on this page should not be considered as financial advice. If you are unsure what’s right for you, please make sure you speak to a financial adviser.
What is family life insurance?
Family life insurance is not a specific life insurance product. It’s simply another name that some people use for life insurance, that provides your family with financial support if you pass away during the term of the policy.
This financial support could be used for any reason, such as to repay a mortgage, cover household bills, childcare costs, or even funeral expenses.
How does family life insurance work?
Setting up family life insurance might give your family and loved ones the peace of mind they need. In fact, the right policy could protect your family’s future, especially at times when you least expect it to.
1. Speak to a financial adviser
It’s always highly recommended to speak with a financial adviser first. They will offer accurate and bespoke advice based on your individual circumstances.
Before speaking to a financial adviser, you’ll probably need to have at least the following information handy:
- Your personal salary or overall household income.
- A breakdown of your lifestyle costs.
- Information regarding any other insurance policies that have been taken out in your name
- Outstanding amounts left on your mortgage, or any other debts or liabilities you have.
2. Select the right life insurance policy for you
The right policy will depend on a range of factors, including:
- How much cover you want.
- The term you want to cover.
- Your current financial situation.
- Your age.
- Your health (including whether you smoke).
- Any critical illness cover for you or your children.
- If you are a homeowner.
Some insurers may only offer term life insurance policies, whereas other insurers may also offer whole of life insurance policies, so it’s best to shop around and get recommendations from your financial adviser.
If you’re eager to know the difference in policies, we’ve also covered that later in this guide.
3. Specify the details
Once you have shopped around for the right policy, as insurers can vary, you’ll be able to start specifying the details so you can get a quote that tells you how much you’ll need to pay for your insurance cover.
If you’re considering a term life insurance policy, you’ll need to decide the length of time your policy lasts. With LV=, if you are 39 years old or younger, you’ll be able to request up to 50 years of cover. From 40 years old, how long your cover can last reduces with your age, because the cover will need to end before your 90th birthday.
During this stage, you’ll also be able to choose whether you want a single or joint life insurance policy. In addition, you’ll need to specify the amount of cover you want, up to a maximum of £1,200,000 with LV=.
4. Start paying monthly
Once the details of your policy have been specified and you’ve decided on the total amount, the insurer will then assess your application and confirm whether they are prepared to offer you cover.
Once they’ve confirmed they can offer you cover, and you’re happy to go ahead, you’ll need to start paying a regular amount for it (known as a premium). In some cases (depending on your personal circumstances), cover could start at just £5 per month.
How long you pay depends on how long your policy is due to last for, but until it’s due to end you’ll need to continuously keep paying for your life insurance policy. If you are unable to keep up with payments or miss them, it’s likely that your policy will be cancelled. However, if you do find yourself struggling financially, it’s worth speaking to your insurer first.
5. Make a claim (or not)
To receive any payments from a loved one’s life insurance term policy, they will need to have passed away during its specified term. Alternatively, where critical illness cover is also purchased, it may be possible to receive a payout prior to their death.
If you’re fortunate to outlive your policy, you may be able to either extend it (dependent on age and your insurer’s age limit) or reassess whether you still need one.
As your policy nears its end date, it will promptly expire and no further payments will be needed, unless you choose to extend it.
You won’t receive any money back that you’ve previously spent.
You won’t receive any money back that you’ve previously spent.
What are the different types of family life insurance?
For families, it’s possible to choose from up to three major types of policies, but this is normally dependent on the provider. From whole-of-life to term life insurance, you can also cater these to be single or joint policies, as well as add on critical illness cover for both you and your children.
Whole of life insurance |
Level cover life insurance |
Decreasing cover life insurance |
Increasing cover life insurance |
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What is it? |
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Whole of life insurance keeps you protected for your entire life, as long as premiums are always paid on time and kept up to date. LV= no longer offers whole of life insurance as a product. |
This life insurance policy keeps premiums and total cover at the same amount throughout the policy term you choose. With LV=, you’ll be able to specify level cover to last for between five and 50 years, depending on your age. |
Decreasing cover life insurance is designed to cover the reducing amount owned on a capital and interest repayment mortgage. As you repay your mortgage over time, and the amount you owe decreases, so does the cover on your policy. You can select a term of between five and 50 years, depending on your age. However the amount you pay for your cover remains fixed. |
This life insurance policy increases each year (either by a fixed amount, or by the increase in inflation) and is designed to protect your policy against things like inflation or cost of living increases. It ensures your beneficiaries receive a death benefit in line with current living and expenses costs. Your premiums will also go up, as your cover increases (but sometimes at a different rate to the increase in cover, depending on the provider). You will need to speak to a financial adviser to discuss increasing life insurance with LV=, as we only offer this type of cover through financial advisers. |
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What’s included? |
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Cover for the rest of your life. |
Cover for a specified term. |
Cover for a specified term. |
Cover for a specified term. |
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Premiums can be fixed, but they can also vary as you get older. |
Fixed premium rates and payments. |
Fixed premium rates and payments. |
Rates that can be increased year on year, as your cover amount increases. |
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Usually a fixed death benefit paid when you pass away. |
Predetermined death benefit amount. |
A total coverage amount that decreases as the amount you owe on a capital and interest repayment mortgage decreases. |
Total coverage amount increases either by a fixed percentage or in line with inflation (depending on the provider). |
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When might it be right for you? |
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If you want to leave a larger sum for beneficiaries and can afford to. |
If you only need cover for a set number of years rather than for the rest of your life. |
If you are a homeowner and have a capital ad interest repayment mortgage, which is reducing at the same or a lower rate of interest covered by the policy. |
If you want additional security for your family in the event of your death. |
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If you want a guaranteed payout for loved ones when you pass away. |
If you want to provide some security for your family or financial dependants. |
If you don’t have other needs for life cover other than to protect your mortgage. |
If you want your cover amount to be protected against the effects of inflation. |
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If you need cover for the rest of your life, rather than for a fixed period of time. |
If you want peace of mind and additional funds available to your family in the event of your death. |
If you want to cover the amount owed on capital or interest repayment mortgages. |
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When might it not be right for you? |
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The length of cover means higher premiums to be paid. |
If you want cover for the rest of your life, whenever you die. |
If you want to cover an interest only mortgage. |
If you are unable to accommodate increasing premium costs. |
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It requires a commitment to regular payments. |
If you can’t afford to commit to monthly payments. |
If you are planning to make regular over or underpayments. |
If your total amount of coverage is too small to offset the cost of inflation. |
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If you don’t need cover for the rest of your life. |
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Can you get life insurance for children?
While life insurance can be purchased by anyone over the age of 17 years old, life insurance for children tends to be in addition to a parent or guardian’s policy. As well as offering peace of mind for parents, it also ensures that their family has a plan if a child falls ill.
With LV=, if you choose to add critical illness cover to your life insurance, you can also choose to add critical illness cover for your children. Enhanced Children’s critical illness cover can be added to a parent’s critical illness policy when it’s set up, or at a later date (provided your insurance policy has at least 5 years still to run).
With LV=, this type of cover also offers families additional support, as it covers the life insured for certain specified pregnancy complications if they are planning to have children in the future.
It provides extra reassurance and protects your children in case the worst happens.
LV= children’s critical illness covers around 95 different conditions*, including 10 child-specific illnesses. With an addition like this in place on your LV= policy, your children could be covered from birth until their 23rd birthday.
It’s important with LV that if you choose to add this cover, you’ll need to remove it once all your children have reached 23 years of age, otherwise you’ll be paying for cover that you no longer need, or can claim on.
* 20 of these are covered under one condition for less advanced cancers.
Who needs family life insurance?
It’s true that not everyone needs life insurance, but, for many families, it can help provide peace of mind.
Depending on your circumstances, life insurance could be a good option if someone is financially dependent on you. This could be a child, a spouse, a civil partner, or other relatives.
The idea of family life insurance is that you pay money for insurance that lasts a specified term, determined by you, or for the rest of your life. If you pass away during that specified term, your family will receive a death benefit, which is the total amount of cover arranged on your life insurance policy.
Alternatively, you can take out critical illness cover alongside your life insurance policy to protect you if you are diagnosed with one of a number of specified illnesses during your policy, such as things like cancer, heart attack or stroke. As well as added peace of mind, you’ll also have one less thing to worry about for the future of your family.
Family life insurance is also a great idea for those with small children or relatives with advanced care needs. Many people choose for their policy to end once their youngest child is able to support themselves financially. However, if you have a child or close relative who will need care and support for the rest of their adult life, you may decide to choose a longer term than this.
What can family life insurance be used for?
Family life insurance can be used to support your family and ensure some financial security if a tragic event happens. As a result, you can use the pay out from the policy to:
- Pay towards or finish paying a mortgage.
- Pay towards monthly expenditures, such as household bills or maintenance.
- Cover the cost of childcare or raising children.
- Pay towards or cover funeral expenses.
In some instances, such as critical illness cover, you may be able to access your life insurance policy before you pass. If this is the case, you can also use it to:
- Cover any care expenses.
- Settle any outstanding debts.
- Hep pay towards any home adaptations you may need because of your illness, or to aid your recovery.
Can you afford to take out a life insurance policy?
Before making major financial decisions, it’s always best to speak to a financial adviser first.
Most policies are designed to be affordable, but the premiums will vary depending on the coverage amount you choose (the more cover you choose the more it usually costs), or how long it lasts (the longer the period you choose to cover, the more it usually costs, because there’s a greater chance the insurance company will have to pay a claim during the policy term). The younger you are when you take out the policy, the more affordable it’s likely to be. However, personal circumstances always change, so it’s best to seek advice first before purchasing a policy.
If you’re stuck on who to ask, we have the right people for you. At LV=, we’ve partnered with LifeSearch to offer independent and professional advice tailored to your individual requirements.
What happens to your family life insurance when your children get older?
Some parents choose to keep their life insurance policy going right up until the maximum term (with LV= this is 89 years old).
Parents can choose to continue life insurance once their children are well into their adult lives, especially if they are still finding their feet or want to offer an additional bit of protection. Some may also use family life insurance as a contingency plan to support adult children who will require care for the rest of their lives.
When can family life insurance be claimed?
Family life insurance can be claimed when you pass away. With a term life policy, the funds are only available if you pass away before your policy expires. The full cover amount is then paid out to your estate where a chosen beneficiary can use it for paying household bills or supporting childcare requirements.
Alternatively, family life insurance could be claimed earlier if you have a condition described under your provider’s critical illness cover. In this instance, you may be entitled to your life insurance early, to help you oversee where your money is used. It could be put towards additional expenses related to your illness such as adaptations to your home, or straight into repaying a mortgage.
When is family life insurance not paid out?
There are a few instances where life insurance will not be paid out, so it’s important to note these when taking out your policy.
1. If you outlive your term policy
It’s fantastic if you outlive your term insurance policy, especially as this means you get to spend more time with your loved ones. Most people take out a policy when their families are much younger as a contingency plan if something tragic happens. If you pass away and your policy has already expired, your life insurance cover won’t be paid out.
2. If you stop paying your premiums
As life insurance is a product, you’ll need to keep up with payments. If you aren’t able to do so, your family and loved ones could miss out if you pass away. When you stop paying your premiums, your cover will usually stop and you could lose your life insurance policy as well as your total coverage amount.
3. If you take your own life
With LV= if you’re deemed to have intentionally taken your own life within the first 12 months of your policy, no claim will be paid, and your family or loved ones will not receive the death benefit.
Do LV= offer family life insurance?
Yes, LV= offer a choice of life insurance options (a lump sum when you die or if earlier are diagnosed with one of our eligible critical illnesses) or life insurance with critical illness cover (a lump sum when you die or are diagnosed with one of our eligible critical illnesses).
If this isn't right for you, there are other options that a financial adviser may recommend to you. If you don't have an adviser already, we've teamed up with LifeSearch to give you honest, unbiased advice, who will chat, recommend and then help with the arrangements.
