There's more to Life than Mortgages!

Mortgages have been commonplace in the UK for many years now and it is recognised that life cover is essential to ensure that the burden of ongoing mortgage payments is removed in the event of death.

Less common is any form of additional life cover to allow the survivor to have choices in the way that they bring up their children - the average family in the UK has 1.8 children now and both partners are likely to have to work.

So what would happen without any surplus cover?

Assuming that the mortgage has been fully covered, a capital sum would be paid by the insurer and it would then be up to the survivor to clear the loan in full or in part. The problem is that, even without a mortgage, there are still substantial costs in bringing up a family.

Given the choice, it is likely that the survivor would want to ensure that their need to work did not affect their children's future and that they could manage the two things without the pressure of juggling the household finances.

Family Income Benefit

This is a simple and cheap form of life cover that provides an annual payment instead of a single capital sum. The idea is that this would fully or partially replace the salary lost in the event of death to the end of a specific term, often selected to the point at which the children would be independent.

Therefore, if a policy was taken out for say, £20,000 a year benefit for 18 years and one of the policyholders died in year 3, the survivor could expect to receive the selected annual benefit until the end of the policy term. As the liability to the insurer decreases as the years go by, this type of insurance can be extremely affordable.

For example, a 30 year old non smoking couple effecting a policy for 18 years, paying a benefit of £20,000 per year on death would cost around £16.50 per month^*.

When you consider that this policy would ease the financial burden of the survivor it is little cost when compared with an average household budget.

So, if you are not sure whether your life assurance would adequately provide for your family in the event of your death make sure that you consult a qualified financial adviser to see what your options are. Ensure that you deal with an adviser that has access to a wide range of providers to ensure you reach the very best cover and the cheapest premiums.

Please note that the information contained in this article is not intended to represent personal advice. Individual circumstances and needs differ and you will need to consult with a qualified financial adviser to ensure that you receive appropriate advice.

^*Legal & General illustration 29^th July 2008