Family life insurance

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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 family 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 provides your family with financial support if you pass away during the term of the policy. It is not a specific life insurance product. It’s simply another name for life insurance. This financial support could be used to repay a mortgage, cover household bills, childcare costs, or funeral expenses for example.

Our family life insurance options include standard Life Insurance, which pays out a lump sum if you pass away, as well as Life Insurance with Critical Illness Cover, which provides a lump sum if you pass away or are diagnosed with one of our specified critical illnesses.

How does family life insurance work?

Setting up family life insurance can give your family and loved ones the peace of mind they need. In fact, the right policy could protect your family’s financial future, especially at times when you least expect it to.

It works by helping you cover essential costs like mortgages, childcare and living expenses for your family in the event of an accident or death.

You can customise your policy by amending things like your policy structure; whether it covers your whole life or only a certain period (known as term life insurance).

How to choose a family life insurance policy

Choosing the right family life insurance policy often involves reviewing any debt, income replacement costs (which is often around 10x your annual income according to MoneySavingExpert.com) and a total cost of significant future expenses (calculated by any outgoings you currently/will be paying.)

Here are a few tips to make sure you’re getting the right policy for you.

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, helping to shape your family’s life insurance coverage.

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 and your family

The right policy will depend on a range of factors, including:

• How much cover you want for your family.
• 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 family 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 reaches 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.

Why take out a life insurance policy for your family?

Whether you’re a young family or a household with grown-up children, a life insurance policy provides peace of mind and financial stability for your family should the worst happen, and you pass away during your policy term.

Both you and your family can feel safe in the knowledge that everything is taken care of financially, to offer security.

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.

1. Whole of life insurance

Whole of life insurance provides comprehensive protection for your entire life, ensuring cover as long as premiums are consistently paid and kept up to date. This type of insurance usually offers a fixed death benefit that will be paid whenever you pass away, making it ideal for those who want to guarantee a payout for their family, partner and loved ones or need coverage for their entire lifetime.

Premiums can be structured in different ways, potentially remaining fixed or varying as you age, giving you the flexibility to choose a plan that best fits your financial situation and long-term goals. Whether you want to leave a larger sum for beneficiaries or simply ensure financial security for your family beyond a fixed period, whole-of-life insurance can offer a robust solution for lifelong protection. 

Please note, LV= no longer offers whole of life insurance as a product.

2. Level cover life insurance 

Level-term life insurance offers a straightforward protection plan with consistent premiums and a fixed death benefit amount throughout your chosen policy term. Depending on which provider you use, the policy lengths available could be different. With LV=, depending on your age, you can select protection lasting between five and 50 years, making it an ideal option for those seeking financial security for a specific period.

This type of policy is particularly suitable for individuals wanting to provide additional funds and peace of mind for their family or financial dependents, over and above the amount owed on a capital and interest repayment mortgage. If you only need protection for a set number of years rather than your entire lifetime, level-term life insurance provides a predictable and reliable solution that ensures your loved ones are protected with a guaranteed payout amount should you die while the cover is in place.

3. Decreasing cover life insurance

Decreasing life insurance is designed to provide cover for a capital and interest repayment mortgage, providing protection that reduces in line with your outstanding mortgage balance. As you repay your mortgage over time, the protection cover amount also reduces. Your premium remains fixed throughout the policy term, although is usually less than an equivalent level-term policy.

With LV=, you can select a protection period between five and 50 years, depending on your mortgage term and age.

This type of policy is particularly suited to those who want to ensure their mortgage debt is protected and have no additional life insurance needs beyond safeguarding their home loan. If you're looking to match your life insurance protection to your decreasing mortgage balance, this type of policy aims to offer a tailored and cost-effective approach to financial security. 

4. Increasing cover life insurance 

Increasing life insurance is a dynamic policy designed to protect the buying power of your cover against the effects of inflation and rising living costs by gradually increasing the death benefit each year. The amount of cover can increase either by a fixed percentage or in line with one of the main measures of inflation, like the Retail or Consumer Prices Indexes (RPI or CPI), This means the financial protection for your loved ones aims to keep pace with economic changes.

As the protection amount grows, your premiums will also adjust, potentially at a different rate depending on the provider. This type of insurance is ideal for individuals seeking additional long-term security for their families, with the goal of maintaining the real-world value of the potential payout in the face of rising expenses. Typically, this policy is available through financial advisers and offers a specified term of protection. It’s a flexible solution for those who want their life insurance cover to remain relevant and meaningful for their family as living costs evolve over time.

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.

How much family life insurance cover do I need?

Working out how much life insurance your family needs depends on your financial situation and what you want the policy to cover. The aim is to make sure your loved ones could maintain their lifestyle and meet essential costs if you are no longer around.

A common approach is to combine your major financial commitments with future living costs.

A simple way to estimate your cover:

You can calculate your cover by adding together:

• Outstanding mortgage or rent costs.
• Household bills and everyday living expenses.
• Childcare and education costs.
• Any outstanding debts (loans, credit cards).
• Funeral costs.
• Future income replacement (often 10–15× your annual income).

Example: how much cover a family might need

Let’s look at a typical scenario:

Say we’re looking at a family with two parents and two young children. One parent earns £35,000 a year, and the family still has £180,000 left to pay on their mortgage. Alongside this, they spend around £1,800 each month on everyday living costs like bills, food and childcare.

Step 1: Cover major debts

• Mortgage: £180,000

Step 2: Replace income

If the goal is to support the family for 10 years:

• £35,000 × 10 = £350,000 

Step 3: Add childcare and future costs

• Estimated childcare/education support: £50,000 

Step 4: Add a safety buffer

• Funeral costs + unexpected expenses: £10,000 

Total estimated cover needed:

£180,000 + £350,000 + £50,000 + £10,000 = £590,000

Should you take out a single or joint life insurance policy?

There are a number of reasons a family may choose to take out either a single or joint life insurance policy. This depends on your household finances, whether you share financial responsibilities, and how you want to protect your family in the long term.

Put simply, you can take out a single life plan even as a couple or as parents. If both partners take out their own policy, and a claim is made on one plan, the other person’s policy will remain in place. This means ongoing financial protection for your family, which can be especially important if you have children or dependents who rely on both incomes.

Joint life insurance on the other hand, covers both people under one policy for the same amount of cover and term, but usually only pays out once, typically on the first claim. Learn more about the differences between single and joint life cover.

What can family life insurance be used for?

Family life insurance can be used to support your family and ensure some financial security if you die during the term of the policy. As a result, you can use the pay out from the policy to:

• Pay towards or finish paying a mortgage.

• Pay towards monthly expenditures, like household bills or maintenance.

• Cover the cost of childcare or raising children.

• Pay towards or cover funeral expenses.

In some instances, like if you’ve added 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.

• Help pay towards any home adaptations you may need because of your illness, or to aid your recovery.

Can you afford to take out a family 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, like lifestyle and smoking can also change premiums or cover, 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 off the mortgage, cover household bills or supporting childcare requirements.

Alternatively, family life insurance could be claimed earlier if you have added critical illness cover and you suffer a condition, illness or injury/accident described under your provider’s plan. In this instance, you may be entitled to your amount of cover early, to help you oversee where your money is used. It could be put towards additional expenses related to your illness like 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 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 paid for by you each month over the policy term, you’ll need to keep up with paying your premiums. 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 life insurance with critical illness cover (a lump sum when you die or are diagnosed with one of our specified 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.

Family life insurance FAQs

See some of the answers to the most common family life insurance questions.

Is family life insurance worth it?

Family life insurance can be worth considering if your loved ones rely on your income or financial support. It can help cover major costs like a mortgage, bills and childcare, reducing financial pressure on your family if you pass away during the policy term.

Can stay-at-home parents get life insurance?

Yes, stay-at-home parents can take out life insurance. While they may not earn an income, their contribution still has financial value, like childcare, household management and daily support. A policy can help cover these costs if they were no longer around.

How long should a family life insurance policy last?

Many people choose a policy term that matches their biggest financial responsibilities. For example:

• Until a mortgage is paid off.
• Until children reach adulthood.
• Until retirement.

The right length will depend on your personal circumstances and what you want the policy to protect.