Family Life Insurance

Why Families Need It

If a parent dies, the bills do not stop. The mortgage, the weekly shop, the childcare and the everyday costs all carry on, but a wage may not. Life insurance replaces that lost money, so your family can stay in their home and keep their routine.

Yet many families have no safety net. The FCA found that 58% of UK adults hold no protection product at all, meaning no life insurance, critical illness or income protection.2 Among parents the picture is much the same. Research reported by Which? found that about 4 in 10 have no cover in place, even though many say they worry about how their family would cope.3

Who To Cover In Your Family

It is worth thinking about every adult whose loss would cost the family money, not just the main earner.

• Both earners. If two incomes pay the bills, losing either one hurts. Most families cover both parents, with a policy each or a joint policy.
• The stay at home parent. Their work has real money value. Replacing childcare alone is expensive: a full time nursery place for a child under two averages around £240 a week in England, close to £12,400 a year.4 Cover for a stay at home parent helps the surviving partner pay for that care.
• Single parents. If you are the only earner and carer, cover matters most of all. With no second income to fall back on, a payout and a named guardian can keep your children secure.

How Much Cover Your Family Needs

The clearest way to work it out is to add up what your family would need to stay on its feet. This example shows how the pieces fit together.

• Clear the mortgage. Usually the biggest debt, and the one that keeps a roof over their heads.
• Replace income. Enough to cover everyday living for the years your family would need support.
• Cover childcare and education. Especially while the children are young.
• Allow for a funeral and final costs. A funeral now averages over £4,400.5

A common rule of thumb is around 10 times your yearly salary, but adding up the pieces gives a figure that actually fits your family.

Ways To Set Up Family Cover

There are three common ways to arrange cover for a couple. None is automatically best, it depends on your budget and what you want the money to do.

One thing to watch with a joint policy: it usually pays out only once, so after a claim the surviving partner is left without cover. Two single policies cost a little more, but each pays out, which many families prefer.

It also helps to picture the two shapes a payout can take.

What It Costs

Family cover is cheaper than most parents expect. The average policy works out at around £22 to £25 a month, and family income benefit often costs less than the same value paid as a lump sum.5 The biggest factor is age, because the price rises the longer you wait, so buying while you are young and healthy locks in a lower rate. Covering both parents together can also work out cheaper than arranging it separately later.

Protecting The Children

Family life insurance is really about the children, and a few extra steps make sure the money protects them well.

• Write the policy in trust. This sends the payout straight to your family, outside your estate, so it avoids probate delays and usually inheritance tax, charged at 40% above £325,000.5 It is a simple step and usually free.
• Name a guardian in your will. Life insurance provides the money, but a will sets out who would care for your children. The two work together.
• Check the children’s cover. Many family policies include some cover for your children at no extra cost. It is not the main purpose of the policy, so read what is included.

Worked Example

This is a simple illustration of how family cover might be set up. It is not a quote or a promise of cover.

Priya and Sam have two young children and a £200,000 mortgage. They each take out £250,000 of level term cover for 20 years, written in trust, and add family income benefit of £1,500 a month. Together it costs them around £40 a month.

When Sam dies in year 7, Priya receives the £250,000 lump sum, which clears the mortgage, plus £1,500 a month to help with childcare and living costs for the rest of the term. The children stay in their home, and their day to day life carries on.

Why Use Surely

Arranging cover for a whole family, two parents, the right amount, the right setup, can feel like a lot. Surely makes it simple.

We explain the options in plain English, help you work out how much your family needs, and compare cover from selected UK insurers so you can protect both parents from one place. We compile and cross check real UK claims and pricing data, so you see the full picture.

The reassurance is in the numbers. In 2024, UK insurers paid a record £8 billion in protection claims, and around 97% of life insurance claims were paid.1 Surely helps you compare and get quotes online, and does not give advice itself.

Frequently Asked Questions

Do both parents need life insurance?

It is usually worth covering both, including a stay at home parent, because losing either one creates real costs, from lost income to paying for childcare. You can use a policy each or a joint policy.

Should we get a joint policy or two single policies?

A joint policy is simpler and often a little cheaper, but it usually pays out only once, then ends. Two single policies cost slightly more, but each pays out, so the surviving partner keeps their own cover. Many families prefer two singles for that reason.

Does family life insurance cover my children?

Many family policies include limited cover for your children at no extra cost, which pays a small amount towards costs if a child dies. It is not the main purpose of the policy, so check the detail of what is included.

What happens to a joint policy if we separate?

A joint policy usually cannot be split, so you may both need to take out new single policies. Some insurers offer a separation option, so it is worth checking before you buy.

Is a death in service benefit from work enough?

It is a useful start, often a few times your salary, but it usually ends if you leave the job and may not cover the mortgage for long. Research suggests around 21% of parents rely on it, and most families need more.3

Is the payout taxed?

It is normally paid tax free. It can count towards inheritance tax, charged at 40% above £325,000, unless the policy is written in trust. Tax treatment depends on your circumstances and can change.

This guide deals with death and serious illness. For impartial money guidance you can use MoneyHelper, the government backed service.

Family Protection In Numbers

Here is our summary of the latest data.

Surely analysis of FCA, Which? and ABI data.123

Getting Started

Work out who would need money if you were gone, and how much. Cover both parents, including a stay at home parent. Match the amount to your mortgage and living costs, and the term to the years your children would need support. Write the cover in trust, name a guardian in your will, then compare a few insurers and answer the health questions honestly.

Cover, price and eligibility depend on your personal circumstances, age, health, smoker status and insurer terms. Life insurance pays out only during the policy term and is subject to the policy terms and claim approval. Surely helps you compare insurance and does not provide regulated financial advice.