What family protection needs to do
Good family cover should clear the mortgage, replace lost income, and cover the cost of raising children. The best policy depends on your specific commitments — a mix of products often works better than a single one.
1. Level term life insurance
A fixed lump sum if you die within the term. Best for clearing a mortgage or leaving a capital sum the family can invest. Simple and cost-effective for a defined need.
2. Family income benefit
Instead of a lump sum, this pays a regular tax-free income to your family for the rest of the term. Best for replacing your salary so the household can keep running — often cheaper than equivalent lump-sum cover and easier for families to manage.
3. Decreasing term (mortgage) cover
Tracks a repayment mortgage, clearing it if you die. Best, and cheapest, specifically for mortgage protection — often combined with family income benefit for income replacement.
4. Joint vs two single policies
A joint policy is slightly cheaper but pays out once. Two single policies cost a little more but pay out twice (once per parent) and are easier to separate later. Best for most families: two single policies for the extra cover and flexibility.
5. Adding critical illness cover
Critical illness cover pays out if you're diagnosed with a serious illness — often more likely than dying during your working years. Best added to life cover so a serious diagnosis doesn't derail the family finances. See our best critical illness cover guide.
Building the right combination
- Mortgage: decreasing term (or level term)
- Income replacement: family income benefit
- Both parents: two single policies
- Serious illness risk: add critical illness cover
How to find the best family cover
A protection specialist can build the right mix for your mortgage, income and children's ages at the best whole-of-market price. Find a life insurance specialist through Nesto — free, no obligation.
Frequently asked questions
How much life insurance does a family need?
A common guide is enough to clear the mortgage plus several years of income. The right figure depends on your debts, income and children's ages.
Is family income benefit better than a lump sum?
For replacing income, often yes — it's easier to manage and usually cheaper. Lump sums suit clearing a mortgage or one-off needs.
Should we get a joint or two single policies?
Two single policies usually offer better value and flexibility — they pay out twice and are easier to separate later.
Do stay-at-home parents need cover?
Often yes — replacing childcare and household contributions can be a significant cost. Don't only insure the earner.
Should I add critical illness cover?
It's worth strong consideration — a serious illness is more likely than death during working years and can hit family finances hard.