Life Insurance for Expecting Parents UK
The journey to parenthood is a whirlwind of excitement, anticipation, and preparation. From choosing a name to decorating the nursery, your focus is squarely on the new life you're about to bring into the world. Yet, amidst the joy, a new sense of responsibility settles in. You're no longer just a couple; you're becoming a family.
This profound shift makes it the perfect time to think about the future and how to protect it. Financial planning might not be as thrilling as feeling that first kick, but securing your family's financial stability is one of the most loving and essential preparations you can make. This guide is here to walk you through everything you need to know about life insurance and other protection policies when you're expecting.
WeCovr’s guide to protecting your family during pregnancy
Welcoming a baby changes everything, especially your financial landscape. Suddenly, you have a tiny person who will be completely dependent on you for at least the next 18 years. This dependency underscores the need for a robust financial safety net.
Thinking about "what if" scenarios is never pleasant, but it's a crucial part of responsible parenting. What if you or your partner were no longer around to provide for your child? What if a serious illness prevented you from working? These are the questions that protection insurance is designed to answer, providing peace of mind so you can focus on the joys of your growing family.
At WeCovr, we help thousands of new and expecting parents navigate these questions. Our goal is to demystify the world of insurance, helping you find the right cover from the UK's leading insurers, ensuring your new family is protected, no matter what life throws your way.
Why is Financial Protection Crucial for Expecting Parents?
The arrival of a baby brings immense joy, but also significant financial commitments. It's not just about the immediate costs of cots, car seats, and nappies; it's about the long-term cost of raising a child to independence.
According to the Child Poverty Action Group's 2023 research, the basic cost of raising a child to the age of 18 in the UK (excluding childcare and housing costs) is staggering:
- For a couple: Over £166,000
- For a lone parent: Over £220,000
These figures highlight the immense financial contribution each parent makes, whether through direct income or by providing unpaid care. The loss of either parent would have a devastating financial impact, compounding the emotional trauma.
Consider these scenarios:
- The Unthinkable Happens: A parent passes away unexpectedly. Without life insurance, the surviving partner might struggle to cover the mortgage, pay household bills, and fund the child's upbringing on a single income. They may be forced to sell the family home or return to work sooner than planned.
- A Serious Illness Strikes: A diagnosis of cancer, a heart attack, or a stroke could mean months or even years off work. Critical Illness Cover provides a tax-free lump sum to help manage finances during this difficult time, allowing you to focus on recovery without the added stress of mounting bills.
- An Injury Prevents Work: A long-term back problem or a serious accident could leave you unable to earn an income. Income Protection insurance acts as a replacement salary, paying out a monthly benefit to help you maintain your family's lifestyle.
Financial protection is not about being pessimistic; it's about being realistic. It's a practical step to ensure that your child's future is secure and that they can still have the opportunities you dreamed of for them, even if you're not there to provide them yourself.
Understanding Your Core Protection Options
Navigating the insurance market can feel overwhelming, with various products that seem to do similar things. Let's break down the three core pillars of family protection.
1. Life Insurance
This is the foundation of family financial protection. It pays out a tax-free lump sum or a regular income to your loved ones if you pass away during the policy term. This money can be used to:
- Pay off the mortgage, ensuring your family has a secure home.
- Replace your lost income to cover day-to-day living costs.
- Fund future expenses like childcare, school fees, and university education.
- Cover funeral costs.
There are several types of life insurance to consider:
| Policy Type | How It Works | Best For |
|---|---|---|
| Level Term | The payout amount remains the same throughout the policy term. | Covering an interest-only mortgage or providing a lump sum for family living costs. |
| Decreasing Term | The payout amount reduces over time, usually in line with a repayment mortgage. | Covering a specific debt like a repayment mortgage. Premiums are typically lower. |
| Family Income Benefit | Instead of a lump sum, it pays out a regular, tax-free monthly or annual income until the policy term ends. | Replacing a lost salary in a manageable way, mimicking a monthly income for the surviving partner. |
| Whole of Life | Guarantees a payout whenever you die, as long as you keep paying premiums. | Covering a guaranteed future cost, such as an inheritance tax bill or funeral expenses. |
Joint vs. Single Policies:
Expecting parents often wonder whether to get a joint policy or two separate single policies.
- Joint Life Policy: Covers two people but only pays out once, usually on the first death. After the payout, the policy ends, leaving the surviving partner uninsured. It's often slightly cheaper than two single policies.
- Two Single Policies: Each partner has their own policy. If one partner dies, their policy pays out, and the other partner's policy remains active. This provides more comprehensive cover, as it could potentially pay out twice. While slightly more expensive, the extra protection is often worth it for families.
2. Critical Illness Cover (CIC)
A serious illness can be just as financially devastating as a death in the family. Critical Illness Cover pays out a tax-free lump sum if you are diagnosed with one of a specific list of serious conditions defined in the policy.
The "big three" conditions covered by almost all UK insurers are:
- Cancer (of a specified severity)
- Heart Attack (of a specified severity)
- Stroke
Most comprehensive policies cover 50+ conditions, including multiple sclerosis, major organ transplant, and permanent paralysis. This money gives you financial breathing room to:
- Take time off work to recover.
- Allow your partner to take time off to care for you.
- Pay for private medical treatment or home modifications.
- Clear debts to reduce financial pressure.
A crucial feature for expecting parents is that most CIC policies now include Children's Critical Illness Cover at no extra cost. This means if your child is diagnosed with a serious illness, you would receive a payout (typically up to £25,000 or 50% of your cover amount) to help you manage during that incredibly difficult time.
3. Income Protection (IP)
Often described by financial experts as the most important protection policy of all, Income Protection is designed to replace your salary if you're unable to work due to any illness or injury.
Unlike Critical Illness Cover, which pays a lump sum for a specific condition, IP pays a regular monthly benefit for as long as you are off work, potentially right up to retirement age.
Key features to understand:
- Deferment Period: This is the waiting period between when you stop working and when the policy starts paying out. It can range from 4 weeks to 52 weeks. The longer the deferment period you choose, the lower your premium. You should align it with any sick pay you receive from your employer.
- Level of Cover: You can typically insure up to 50-70% of your gross annual income. The payments are tax-free.
- Definition of Incapacity: 'Own Occupation' cover is the gold standard. It means the policy will pay out if you are unable to do your specific job. Cheaper policies may have 'Suited Occupation' or 'Any Occupation' definitions, which are much harder to claim on.
For the self-employed and freelancers, Income Protection is absolutely vital as they have no employer sick pay to fall back on.
Applying for Life Insurance During Pregnancy
A common myth is that it's difficult or impossible to get life insurance while pregnant. This is simply not true for the vast majority of women. For a normal, healthy pregnancy, applying for life insurance is straightforward.
Insurers are used to dealing with applications from expecting parents. Here’s what you need to know about the process.
The Application Process
- Standard Questions: You'll be asked about your age, health, lifestyle (smoker/non-smoker), occupation, and medical history.
- Pregnancy-Specific Questions: Insurers will ask how many weeks pregnant you are, whether it was a natural conception or via fertility treatment (like IVF), and if you have had any complications.
- Honesty is Essential: You must disclose everything fully and accurately. Failing to mention a pre-existing condition or a pregnancy complication could invalidate your policy in the future.
How Pregnancy Can Affect Underwriting
Insurers assess risk. Pregnancy is a normal life event, but it can sometimes be associated with temporary health changes that insurers need to consider:
- Increased BMI: It's natural to gain weight during pregnancy, which can temporarily push your Body Mass Index (BMI) into a higher category. Most insurers are understanding of this and may use your pre-pregnancy weight.
- Gestational Diabetes: If you develop diabetes during pregnancy, most insurers will want to wait until after you've given birth to see if the condition resolves itself before offering cover. If it does, you can usually get standard rates.
- High Blood Pressure (Pre-eclampsia): Similar to gestational diabetes, insurers will likely postpone their decision until your blood pressure returns to normal post-delivery.
The Golden Rule: Apply as early as possible in your pregnancy. This gives you the best chance of securing cover before any potential complications arise, locking in a premium based on your current good health.
Will I Need a Medical Exam?
For most people, especially younger applicants seeking a moderate amount of cover, a medical exam won't be necessary. Insurers can often make a decision based on your application form and, if needed, a report from your GP.
However, you might be asked for a nurse screening or medical exam if:
- You are applying for a very large amount of cover.
- You have a pre-existing medical condition.
- You have a complex family medical history.
- There are inconsistencies in your application.
Don't worry about this; it's a standard part of the process to ensure the insurer has all the information they need.
How Much Cover Do You Really Need? A Practical Calculation
Deciding on the right amount of cover can be the trickiest part. You don't want to be under-insured, but you also don't want to pay for more cover than you need. Here's a practical method to work it out.
Calculating Your Life Insurance Need
A simple way to think about this is to calculate the lump sum your family would need to maintain their lifestyle if you were gone.
- Debts: Start with your largest debt – the mortgage. Add any other significant debts like car loans or personal loans.
- Income Replacement: How much of your annual income needs to be replaced? Multiply this by the number of years until your youngest child is financially independent (e.g., 21 years old).
- Example: You earn £40,000 and want to replace £25,000 of it for 20 years. That’s £500,000.
- Future Costs: Estimate major future expenses. The big one is education. Do you want to provide for university fees? Current estimates suggest this could be £50,000-£60,000 per child.
- Childcare: If the surviving partner needs to work, they will face significant childcare costs. Research average costs in your area and factor them in for the relevant number of years.
- Final Expenses: Add a buffer of around £10,000-£15,000 to cover funeral costs, probate, and other immediate expenses.
Worked Example:
| Expense | Amount |
|---|---|
| Mortgage | £250,000 |
| Income Replacement (£20k x 18 years) | £360,000 |
| University Fund (for one child) | £50,000 |
| Final Expenses | £15,000 |
| Total Cover Needed | £675,000 |
This may seem like a large number, but a broker like WeCovr can help you find affordable term insurance plans that make this level of protection accessible.
Calculating Your Income Protection Need
This is more straightforward. Your goal is to cover your essential monthly outgoings.
- List Monthly Expenses: Add up your mortgage/rent, utility bills, council tax, food, transport, and other non-negotiable costs.
- Check Insurer Limits: Insurers typically allow you to cover up to 70% of your pre-tax salary. This is because the benefit is paid tax-free and they want to provide an incentive for you to return to work.
- Subtract Other Income: Deduct any other income you would receive while sick, such as statutory sick pay or benefits.
- Choose a Deferment Period: Align this with your employer's sick pay policy. If you get 3 months of full pay, choose a 13-week deferment period to keep costs down.
Special Considerations for Different Family Structures
Every family is unique, and your protection needs will reflect your specific circumstances.
Sole Parents-to-Be
If you are preparing to raise a child on your own, having a robust protection plan is arguably even more critical. There is no second income to fall back on.
- Life Insurance: Essential for appointing a legal guardian and ensuring they have the financial resources to raise your child. This should be arranged alongside a professionally drafted Will.
- Income Protection: Your income is the sole financial support for your child. Protecting it against illness or injury is paramount.
Business Owners, Freelancers & the Self-Employed
If you work for yourself, you are your own safety net. You don't have access to employee benefits like 'death in service' cover or generous company sick pay schemes.
- Personal Income Protection: This is non-negotiable. It's the only way to guarantee an income if you're unable to work.
- Relevant Life Policy: For directors of limited companies, this is a highly tax-efficient way to arrange life insurance. The company pays the premium, but the benefit goes directly to your family, tax-free. The premiums are typically an allowable business expense and don't count towards your annual pension allowance.
- Executive Income Protection: Similar to a Relevant Life Policy, this is income protection paid for by your limited company. It's a tax-efficient alternative to a personal plan.
Insuring a Stay-at-Home Parent
It's a common mistake to think that only the main breadwinner needs life insurance. The economic contribution of a stay-at-home parent is enormous, though unpaid.
If the stay-at-home parent were to pass away, the surviving partner would face huge costs for:
- Full-time childcare
- Housekeeping and cleaning
- After-school clubs and activities
- General home management
The cost of replacing these services could easily amount to £30,000-£40,000 per year. Insuring the stay-at-home parent for a significant sum is therefore just as important as insuring the working parent.
Beyond Insurance: A Holistic Approach to Family Wellness
Protecting your family isn't just about insurance policies. It's about creating a secure and healthy environment for your child to thrive in.
1. Get Your Legal Ducks in a Row: Write a Will
If you don't have a Will, the law decides who inherits your assets and, crucially, who looks after your children. Writing a Will is the only way to:
- Appoint Legal Guardian's: Choose the people you trust to raise your child.
- Ensure Assets Go to Your Child: Set up a trust within your Will to manage your child's inheritance until they are old enough to handle it themselves.
- Place your life insurance in trust: This is a simple process that ensures the life insurance payout goes directly to your beneficiaries, bypassing your estate. This means it's paid out much faster and is almost always free from inheritance tax. We can help you with the trust forms as part of our service.
2. Physical and Mental Wellness
A healthy parent is a happy parent. Pregnancy is a time to focus on your own wellbeing for the benefit of you and your baby.
- Nutrition: Focus on a balanced diet rich in fruit, vegetables, and whole grains. Follow NHS guidelines on foods to avoid during pregnancy. To support our clients on their health journey, WeCovr provides complimentary access to our AI-powered calorie and nutrition tracking app, CalorieHero, showing our commitment to your wellbeing beyond just insurance.
- Sleep: Prioritise rest whenever you can. Sleep is vital for both physical recovery and mental health during this demanding time.
- Gentle Exercise: Activities like walking, swimming, and pregnancy yoga can boost your mood, improve sleep, and help you prepare for labour.
- Mental Health: It's normal to feel anxious or overwhelmed. Talk to your partner, friends, midwife, or GP. Organisations like Mind provide excellent support for perinatal mental health.
The WeCovr Advantage: Why Use a Specialist Broker?
You could go directly to an insurer, but you would only see one price and one set of policy conditions. Using an expert broker like WeCovr opens up the entire market.
- Expert Advice: We live and breathe protection insurance. We understand the nuances of each insurer's underwriting, especially for pregnancy-related applications. We know which insurers are best for certain health conditions or occupations.
- Market Comparison: We compare plans from all the UK's leading insurers to find you the most suitable cover at the most competitive price, saving you time and money.
- Application Support: We handle the paperwork for you, ensuring the application is completed correctly to avoid any future problems. We can chase the insurer on your behalf and help you place your policy in trust.
- No Fee: Our service is free to you. We receive a commission from the insurer you choose, which is already factored into the premium, so you don't pay a penny extra for our expert guidance.
Getting the right advice is key. We are here to act as your trusted partner, guiding you through the process from start to finish and ensuring your growing family has the protection it deserves.
Can I get life insurance if I had IVF treatment?
What happens if I develop a pregnancy complication like gestational diabetes?
Will my premiums increase after I have the baby?
Do I need to update my policy when the baby is born?
Is maternity pay covered by income protection?
Should we get joint life insurance or two single policies?
Why life insurance and how does it work?
What is Life Insurance?
Life insurance is an insurance policy that can provide financial support for your loved ones when you or your joint policy holder passes away. It can help clear any outstanding debts, such as a mortgage, and cover your family's living and other expenses such costs of education, so your family can continue to pay bills and living expenses. In addition to life insurance, insurance providers offer related products such as income protection and critical illness, which we will touch upon below.How does it work?
Life insurance pays out if you die. The payout can be in the form of a lump sum payment or can be paid as a replacement for a regular income. It's your decision how much cover you'd like to take based on your financial resources and how much you'd like to leave to your family to help them deal with any outstanding debts and living expenses. Your premium depends on a number of factors, including your occupation, health and other criteria.The payout amount can change over time or can be fixed. A level term or whole of life policy offers a fixed payout. A decreasing term policy offers a payout that decreases over the term of the cover.
With critical illness policies, a payout is made if you’re diagnosed with a terminal illness with a remaining life expectancy of less than 12 months. While income protection policies ensure you can continue to meet your financial commitments if you are forced to take an extended break from work. If you can’t work because you’ve had an accident, fallen sick, or lost your job through no fault of your own, income protection insurance pays you an agreed portion of your salary each month.
Income protection is particularly helpful for people in dangerous occupations who want to be sure their mortgage will always be covered. Income protection only covers events beyond your control: you’re much less likely to be covered if you’re fired from your job or if you injure yourself deliberately.
Questions to ask yourself regarding life insurance
Just ask yourself:👉 Who would pay your mortgage or rent if you were to pass away or fall seriously ill?
👉 Who would pay for your family’s food, clothing, study fees or lifestyle?
👉 Who would provide for the costs of your funeral or clear your debts?
👉 Who would pay for your costs if you're unable to work due to serious illness or disability?
Many families don’t realise that life, income protection and critical illness insurance is one of the most effective ways to protect their finances. A great insurance policy can cover costs, protect a family from inheriting debts and even pay off a mortgage.
Many would think that the costs for all the benefits provided by life insurance, income protection insurance or critical illness insurance are too high, but the great news is in the current market policies are actually very inexpensive.
Benefits offered by income protection, life and critical illness insurance
Life insurance, income protection and critical illness insurance are indispensable for every family because a child loses a parent every 22 minutes in the UK, while every single day tragically 60 people suffer major injuries on the UK roads. Some people become unable to work because of sickness or disability.Life insurance cover pays out a lump sum to your family, loved ones or whomever you choose to get the money. This can be used to secure the financial future of your loved ones meaning they would not have to struggle financially in the event of your death.
If it's a critical illness cover, the payout happens sooner - upon diagnosis of a serious illness, disability or medical condition, easing the financial hardship such an event inevitably brings.
Income protection insurance can be very important for anyone who relies on a pay check to cover their living costs, but it's especially important if you’re self-employed or own a small business, where your employment and income is a bit less stable. It pays a regular income if you can't work because of sickness or disability and continues until you return to paid work or you retire.
In a world where 1 in 4 of us would struggle financially after just four weeks without work, the stark reality hits hard – a mere 7% of UK adults possess the vital shield of income protection. The urgency of safeguarding our financial well-being has never been more palpable.
Let's face it – relying on savings isn't a solution for everyone. Almost 25% of people have no savings at all, and a whopping 50% have £1,000 or less tucked away. Even more concerning, 51% of Brits – that's a huge 27 million people – wouldn't last more than one month living off their savings. That's a 10% increase from 2022.
And don't even think about state benefits being a safety net. The maximum you can expect from statutory sick pay is a mere £109.40 per week for up to 28 weeks. Not exactly a financial lifeline, right?
Now, let's tackle a common objection: "But I have critical illness insurance. I don't need income protection too." Here's the deal – the two policies apply to very different situations. In a nutshell:
- Critical illness insurance pays a single lump sum if you're diagnosed with or undergo surgery for a specified potentially life-threatening illness. It's great for handling big one-off expenses or debts.
- Income protection, on the other hand, pays a percentage of your salary as a regular payment if you can't work due to illness or injury. It's the superhero that tackles those relentless monthly bills.
Types of life insurance policies
Common reasons for getting a life insurance policy are to:✅ Leave behind an amount of money to keep your family comfortable
✅ Protect the family home and pay off the mortgage in full or in part
✅ Pay for funeral costs
Starting from as little as a couple of pounds per week, you can do all that with a Life Policy.
Level Term Life Insurance
One of the simplest forms of life insurance, level term life insurance works by selecting a length of time for which you would want to be covered and then deciding how much you would like your loved ones to receive should the worst happen. Should your life insurance policy pay out to your family, it would be in a lump sum amount that can be used in whatever way the beneficiary may wish.
Decreasing Term Life Insurance
Decreasing term life insurance works in the same way as level term, except the lump sum payment amount upon death decreases with time. The common use for decreasing term life cover is to protect against mortgage repayment as the lump sum decreases along with the principal of the mortgage itself.
Increasing Term Life Insurance
Increasing term life insurance aims to pay out a cash sum growing each year if the worst happens while covered by the policy. With increasing term life cover amount insured increases annually by a fixed amount for the length of the policy. This can protect your policy's value against inflation, which could be advantageous if you’re looking to maintain your loved ones’ living standards, continue paying off your mortgage in line with its repayment schedule and cover your children’s education fees.
Whole of Life Insurance
Whereas term life insurance policies only pay out if you pass away during their term, whole of life insurance pays out to your beneficiaries whenever this should happen. The most common uses for whole life insurance are to cover the costs of a funeral or as a vehicle for your family's inheritance tax planning.
Family Income Benefit
Family income benefit is a somewhat lesser-known product in the family of life insurance products. Paying out a set amount every month of year to your beneficiaries, it is the most cost-effective way of maintaining your family's living standards to an age where you'd expect them to be able to support themselves financially. The most common use would be for a family with children who are not working yet so are unable to take care of themselves financially.
Relevant Life Insurance
Relevant Life Insurance is a tax-efficient policy for a director or single employee. A simple level term life insurance product, it is placed in a specific trust to ensure its tax efficiency. The premiums are tax deductible and any benefit payable should a claim arise is also paid out tax free, which makes it an attractive product for entrepreneurs and their businesses.
Important Fact!
We can look at a more suitable option mid-term!
Why is it important to get life insurance early?
👉 Many people are very thankful that they had their life, income protection, and critical illness insurance cover in place before running into some serious issues. Critical illness and income protection insurance is as important as life insurance for protecting your family's finances.👉 We insure our cars, houses, bicycles and even bags! Yet our life and health are the most precious things we have.
Easily one of the most important insurance purchases an individual or family can make in their lifetime, the decision to buy life, income protection, critical illness and private medical health insurance can be made much simpler with the help of FCA-authorised advisers. They are the specialists who do the searching and analysis helping people choose between various types of life insurance policies available in the market, including income protection, critical illness and other types of policies most suitable to the client's individual circumstances.
It certainly won't do any harm if you speak with one of our experienced FCA-authorised insurance partner experts who are passionate about advising people on financial matters related to life insurance and are keen to provide you with a free consultation.
You can discuss with them in detail what affordable life, income protection, critical illness or private medical health insurance plan for the necessary peace of mind they would recommend! WeCovr works with some of the best advisers in the market.
By tapping the button below, you can book a free call with them in less than 30 seconds right now:
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Who Are WeCovr?
WeCovr is an insurance specialist for people valuing their peace of mind and a great service.👍 WeCovr will help you get your private medical insurance, life insurance, critical illness insurance and others in no time thanks to our wonderful super-friendly experts ready to assist you every step of the way.
Just a quick and simple form and an easy conversation with one of our experts and your valuable insurance policy is in place for that needed peace of mind!