What life insurance plans should we invest in?

Happy parents watching their baby sleeping on a bed at home

Ask the expert at Smith & Pinching about life insurance - Credit: Getty Images/iStockphoto

My wife and I are both in our thirties, higher rate taxpayers and earning 
good salaries. We’ve always had a fairly relaxed attitude to life so have never had any kind of life insurance (other than through our work schemes) or other insurances, but we’ve just had our first baby, which has changed our thinking. What do you suggest we do to make sure there’s a fund to support our daughter if anything were to happen to us?

Richard Barker is a Chartered Financial Planner Picture:Smith & Pinching

Richard Barker is a Chartered Financial Planner Picture:Smith & Pinching - Credit: Archant

Richard Barker of Smith & Pinching responds:

Life insurance and other protection plans are an important part of your financial planning at every stage of your life, but I can appreciate how your priorities have changed now that you are parents.

There are several different types of protection that you might consider, so I suggest you have a full protection review with an independent financial adviser from a firm of Chartered Financial Planners. Getting independent advice will help ensure you get a package of protection that is suitable for you, without any bias towards a particular insurance provider’s products.

We would need to look at the complete picture regarding your finances and your personal circumstances and explore the various scenarios in which your family might require support. What we would look to achieve is a careful balance between the cost of premiums and the benefits that the various plans might provide.

We would need to analyse the cover provided by your employers’ life insurance schemes to see if they are sufficient for your needs. Additional life cover is usually not a huge expense for a family and so may be a suitable first step.

Other types of cover might include income protection plans that cover either or both of you in the event of you being unable to work through illness or injury. These plans generally deliver a monthly benefit comprising a percentage of your salary, after a suitable waiting period that would perhaps be aligned with your employers’ sick pay regime. It is also possible to include redundancy cover in certain types of plans.

Critical illness cover is a little more detailed in its claim eligibility conditions. It will pay a lump sum if you fall ill with one of a number of illnesses or conditions specified in the policy, at a specific severity level. If you do not already have this in place, private healthcare may also be something that you might want to consider. Shorter waiting times for treatment – and so an earlier return to work – can be a valuable benefit.

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This is a marketing communication: any opinions expressed in this article do not constitute advice.

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