Life insurance for dads

10 min Read Published: 30 Aug 2023

Life insurance for dads Life insurance for dads helps build a financial safety net for your family to ensure that they are able to pursue their lives without financial difficulty if you die prematurely.

In this article, we explain why dads need life insurance; how life insurance for dads works; what it costs and how to buy the best life cover at the cheapest price. We've also taken a look at free parent life cover. 

If you just want to know the best way to buy your life insurance at the best price and receive up to £100 cashback, skip ahead to the end of the article.

Why do dads need life insurance?

If you die, you leave a large gap in your child's support system. Whether your main role is to provide financially or as a carer, or indeed, both for your child, there is a cost involved in replacing this in the event of your death and this is why dads need life insurance - life insurance can cover the cost of replacing your income and pay for childcare.

Costs that may need to be covered:

  • Childcare
  • Cost of living
  • Mortgage/rent payments
  • Funeral costs
  • The cost of further education, weddings or buying their first home

If your children have another parent, you may wish to provide some financial support to them to raise the children by themselves. A life insurance payout could provide a surviving parent with enough money to replace any lost earnings and keep the household running. Often surviving parents find that they may need to change their work schedule to provide more care or may need more childcare so that they can work. Every family is different so it helps to have these conversations and discuss what you may need in case someone were to pass away.

You should also think about who will take up caring responsibilities for your children if you pass away so you can establish what resources they have to do this and what extra help they might need. It is helpful to consider this even if there is another parent in case the worst were to happen. Appointing guardians for your children is something you can do through a will and ensures that you have had a say in those who may eventually care for your children. You can read more about arranging a will in our article, "What is a will and should I get one?".

Whether your children will be cared for by a surviving parent or by a guardian, you should work out how much money they will need to cover the cost of raising your children until they are adults and can fend for themselves. This will give you a steer when it comes to choosing the type of life insurance you need and how much to buy.

How does life insurance for dads work?

Dad's life insurance is pretty straightforward but you should take a little time to consider the amount and type of life insurance you should buy.

You can choose between a:

  • Cash lump sum of money - a tax-free amount of money that is claimed as one payment and can be accessed to fund regular or one-off costs to sustain your family.
  • Regular income - a regular tax-free income that is usually paid every 3 months until your children are of an independent age to fund regular living costs.
  • Cash lump sum of money and a regular income - a combination of a tax-free lump sum of money that can be put away for one-off costs and provide for the future as well as a tax-free income to take care of regular outgoings.

Income life insurance costs less than lump sum life insurance so it can cost less to buy a mix of both instead of the more common lump sum life insurance alone. Speaking to a life insurance expert* will help build a life insurance solution based on your budget and priorities. 

Below we explain the types of life insurance that you will need to achieve the type of payout that will suit your family.

3 types of life insurance for dads

  • Level term life assurance - pays out a tax-free lump sum if you die during the term of the policy.
  • Increasing term life insurance - same as the level term assurance but the value of the lump sum increases, tracking inflation so that the amount you insured doesn't lose value.
  • Family income benefit insurance - pays a regular tax-free income that starts paying out at the point of claim if you die and continues until the policy ends.

How long should dads have life insurance?

You can arrange life insurance for a set number of years or for the rest of your life but in most cases, dads choose a fixed-term life insurance policy.

Term life insurance usually suits fathers because children eventually gain independence becoming less financially reliant as they get older. Also, as you reach retirement age, there is less reliance on the income that you earn as you shift to a pension income. There is no hard and fast rule about what age you should protect your children up to but you should consider 18 years old as a minimum and if you think you'll be supporting them financially through further education then, perhaps until they are 23 years old. Some parents buy life insurance so that it carries on for a bit longer than this too because, in reality, an increasing number of young adults are living at home with their parents into their mid and late twenties.

If you are planning to have more children, try to plan ahead a little and work out how many years of life insurance you'll need between the youngest child's age and when they will reach financial independence.

Life insurance solutions for dads

Example Scenarios Suggestion for the number of years of life insurance Suggestion for type and amount of life insurance
  • 1 child aged 2 and plans for another child within the next 3 years
  • Cost of providing for the children will be £1,500 per month
  • Anticipated future needs such as education, weddings and help to buy first homes - £70,000
  • 26 years of life insurance will take the 2 year old and the planned child to age 23 when they will complete further education
  • £18,000 of annual family income benefit over 26 years (index-linked to track inflation) and
  • £70,000 of level term assurance over 26 years (index-linked to track inflation)
  • 3 children aged 12, 10 and 7
  • Cost of providing for the children will be £2,000 per month and partner can cover £1,000 of this
  • Anticipated future needs such as education, weddings and help to buy first homes - £120,000
  • 16 years of life insurance will take all children beyond the age of 23 to allow them to complete further education
  • £12,000 of annual family income benefit over 16 years (index-linked to track inflation) and
  •  £120,000 of level term assurance over 16 years (index-linked to track inflation)

NB - the above life insurance solutions will not cover your debts, mortgage and funeral costs and you should address these if they are relevant to your circumstances

Is dad's life insurance tax-free?

Yes, most life insurance payouts are paid free of any tax but may be subject to inheritance tax. However, dads can ensure that there is no tax payable on the money that is paid out through life insurance by arranging it in trust. 

The trust is a legal document that states who will distribute the money (your trustees) and who will benefit from the money (your beneficiaries) that is paid out from the life insurance company. You make your choices and the life insurance company keeps this information with your life insurance details - if there is a claim, they follow the instructions on the trust. This stops the life insurance claim money from going into your estate after your death and potentially becoming liable for inheritance tax. You can read more about this in our article, "Writing your life insurance in trust – How it works and why you should consider it".

Life insurance for working dads

If you work and earn an income that provides for your children you should consider the loss of income to your household if you die. Employed dads should consider how much money will be needed to continue raising their children without their income. It's also wise to think about what changes might take place if you do die. Your partner may have to give up or reduce their working hours to manage the household by themselves and that might result in even more loss of income for the household. 

Speak to the people in your life who would step in to help and work out what they'll need to prevent financial hardship.

Life insurance for stay-at-home dads

Stay-at-home dads usually provide a lot of the care for children as well as carrying out household chores, shopping, pick-ups and drop-offs. If your partner works, think about whether they would give up work or just pay for childcare. Your life insurance should provide the extra money that will be needed to either pay for childcare or replace the reduction in your partner's earnings.

Life insurance for single dads

Raising children as a single parent could mean that there is an even larger impact on them if you die. Without the backup of another parent, you will need to think about who will step in to care for your children and what means they have at their disposal to do so. Decisions about where they would live can be entrusted to your chosen guardian by stipulating this in your will.

Life insurance should be built around how much money the guardian will need in order to raise a child. Linking the guardian to the life insurance by nominating them as a trustee so they have access to the money that is paid out can be wise. Remember that a trustee is legally obliged to use the money for your nominated beneficiaries.

How much does life insurance for dads cost?

Non-smoker £300,000 of level term life insurance over 25 years £30,000 of annual family income benefit over 25 years
20 £6.26 £8.41
30 £8.61 £13.32
40 £17.77 £26.06

All life insurance premiums are based on a person who is in good health and has no adverse life risks

Smoker £300,000 of level term life insurance over 25 years £30,000 of annual family income benefit over 25 years
20 £9.31 £13.40
30 £16.46 £23.68
40 £41.66 £56.19

All life insurance premiums are based on a person who is in good health and has no adverse life risks

Additional insurance for dads to think about

Death can feel like the worst thing that could happen to you so you want to insure yourself against it. But it's unlikely event to take place during your working life which is when you are most relied upon. Statistically, you are far more likely to suffer a serious illness or incapacity that could impact your ability to work. You should look at illness insurance while you're looking at life insurance because this can be incorporated into your personal insurance plan. 

Take a look at these illness insurance options:

  • Critical illness cover - pays a tax free cash lump sum if you are diagnosed with any of the listed conditions that are covered including heart attack, cancer and stroke.
  • Income protection - pays a regular income if you are unable to work due to illness or injury to replace lost earnings until such time as you are able to return to work.

Free life cover for dads

Aviva free parent life cover Post Office free parent life cover

(Currently unavailable)

  •  £15,000 per policy
  • One policy per parent, per child
  • Child must be under the age of 4
  • No payment details needed
  • Expires after 12 months
  • Excluded anyone who has had a diagnosis of or treatment for cancer within the last 12 months
  • £15,000 per policy
  • One policy per parent, per child
  • Child must be under the age of 4
  • No payment details needed
  • Expires after 12 months
  • Excluded anyone who has had a diagnosis of or treatment for cancer within the last 12 months
  • Provided by Royal London Mutual

Is free parent life cover worth it for dads?

Not really - it's a way to get you signed up with the insurance company so that when it runs out, you take your full life insurance with that company. The insurance company give you a really small amount of life insurance for one year - it's nowhere near what most families need to meet their financial commitments.

So, you end up extremely underinsured for a year and at the end of the year, you either forget to replace it with a full life insurance policy or you remember to and just fall into buying it with that insurance company instead of shopping around. Either way, it's not a great outcome.

The only situation where it is probably useful is if you've got the life insurance you need and this is a free boost to that life insurance.

It can create a false sense of security without addressing the real needs of any family.

How to find the best life insurance at the cheapest price for dads

To find the best price and be confident that the insurance gives you the right financial protection, you'll need to search the whole market. This doesn't have to be challenging because you can use a comparison site to find the best prices and apply online.

Do be careful here - even though a lot of comparison sites say they are searching the whole market, very often, they're searching a handful of insurance company's prices. Furthermore, the prices are only based on your age and smoker status and you could find that as soon as you complete the application form, the price changes because of how you've answered the questions. You'll also find that you won't get help with completing trust forms to nominate your beneficiaries and avoid inheritance tax.

The best way to buy your life insurance is to speak to a life insurance expert* and discuss your situation. They'll talk you through all your options and ask you for your budget so that you maximise what you're getting for what you want to spend. The key advantage here is that they have access to the whole market. They also complete your application over the phone so you don't have to do this and will guide you through setting up your trust.

As a Money to the Masses reader you'll receive up to £100 cashback if you buy your life insurance with the experts.


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