Why Do Families Need Life Insurance?

*This is a collaborative post on why do families need life insurance?

If you’ve got a family, chances are you spend a lot of time thinking about their future, whether it’s helping with school fees, saving for a holiday, or just making sure the fridge is never empty. But what would happen if you suddenly weren’t around?

It’s not the easiest thing to think about, but it’s sometimes necessary. Life insurance is one of the simplest and most affordable ways to protect your family financially if the worst were to happen. So why does your family need life insurance? Let’s break it down.

1. Provide financial security if you’re no longer here

If you bring in income or provide unpaid work like childcare or running the household, your family would feel the impact if you passed away.

Life insurance provides a cash lump sum if you die during the policy term. That money could help your loved ones:

• Pay the mortgage or rent
• Cover everyday bills
• Maintain their standard of living
• Afford childcare or school costs
• Plan for retirement
• Take time off work to grieve and adjust

Even a basic policy can make a huge difference at a very difficult time.

2. Cover outstanding debts

A lot of families rely on credit, whether it’s a mortgage, car finance, or credit cards. Life insurance can help ensure that those debts aren’t passed on to your partner or children.

For example, if you’ve got a repayment mortgage, you can take out decreasing term life insurance, which reduces in line with your mortgage balance over time. That way, if you die before it’s paid off, the insurance covers it, and your family keeps the home.

It’s a simple, affordable safety net that could prevent financial stress when emotions are already running high.

3. Replace lost income

If your family relies on your income to make ends meet, life insurance can help bridge the gap if you’re not there to earn it.

Let’s say your salary covers the rent, food, school uniforms and family holidays. Losing that income suddenly could throw your family into financial hardship.

A life insurance payout can provide a buffer, giving your partner and children breathing room while they figure out their next steps.

You can even choose a family income benefit policy, which pays out a regular monthly income rather than a lump sum. It’s designed to help families with everyday living costs over a longer period.

4. Protect stay-at-home parents

Life insurance isn’t just for the main earner. If one parent stays at home to look after young children, their contribution is just as valuable, often more so than people realise.

Think about it: if a stay-at-home parent were no longer around, who would do the school run, manage bills, or care for the kids? Chances are, the surviving parent would need to pay for extra childcare or reduce their hours at work.

A life insurance policy for the non-working or part-time parent can help cover those potential costs and ease the burden during an incredibly difficult time.

5. Help with funeral costs and final expenses

Funerals in the UK aren’t cheap. The average cost can reach over £4,000, and that doesn’t include extras like flowers, catering or a headstone.

Life insurance can help cover these expenses, so your loved ones don’t have to worry about finding the money at short notice.

Even a small policy, or over 50s life insurance if you’re older, can go a long way towards easing that pressure.

6. Leave a financial legacy

Some parents want to go a step further and make sure their children have something extra. Whether that’s money for university, a house deposit, or just a financial cushion.

Life insurance can be used to leave behind a tax-free lump sum that gives your children a head start in life. It doesn’t have to be huge; even a modest payout can make a big difference when it’s needed most.

If you’re looking for permanent cover you may want to consider life assurance. Unlike a standard term life insurance policy, it covers you for the rest of your life (as long as you pay your premiums). While it’s generally more expensive it doesn’t have an expiry date.

How much cover do you need?

That depends on your situation, but here are a few things to consider:

• Your mortgage balance
• Any debts or loans
• Daily living costs for your partner and children
• Childcare, school fees or university plans
• Funeral costs or end-of-life expenses

A good rule of thumb is to aim for 10–15 times your annual income. That said, it’s worth getting tailored advice or using a life insurance calculator to work out a figure that suits your family.

What to consider

Life insurance isn’t about being morbid or imagining the worst. It’s about doing something positive that gives your family the security they deserve, even if life takes an unexpected turn.

It’s a small monthly cost that can make a world of difference when your loved ones need it most.

So if you’ve been putting it off, now might be a good time to tick it off the list. Whether you’re just starting a family or getting married, having the right life cover in place is one less thing to worry about.