As a new parent finances can become strained, particularly in an economic downturn. Many parents struggling with mounting bills and debts are looking for ways to save a bit of money each month by cancelling what they see as non-essential payments. But if this includes life insurance cover the economy is almost certainly a false one.
Often short-term financial worries can convince people to risk long-term security as a quick fix but this strategy, although essential for some, is not a wise move for the majority of people.
"Every parent knows how their hard-earned savings can dip thanks to eye-watering education and childcare costs. It is also likely to be of little comfort to mums and dads to hear that pocket money costs are at their lowest level since 2004, or that expenditure on family holidays in 2008 was only 4% up on the 2003 cost." Said Mike Rogers from LV Group.
“Although parents are feeling the pressure financially, it is important they try to look beyond the short to medium term money worries,” he added.
Life insurance needs
A recent survey by protection group AXA revealed some worrying statistics about the amount of people who are foregoing adequate cover in the UK. According to their research nearly half of all respondents said that they had no form of life insurance, which would protect them and their family in case of an accident.
A spokesman from the group said that this, along with people turning away from traditional financial advice, was a worrying trend that desperately needed to be addressed.
This view was backed up by a leading figure from the Association of British Insurers who said that the “false economy” of cutting out insurance could not come at a worse time.
“It's a false economy. Insurance may seem expendable when family budgets are being squeezed, but people should think long and hard about the most sensible places to make savings rather than rashly cancelling essential cover.” Said Malcolm Tarling from the ABI.
Why is it essential?
Of course, many people don't wish to think about anything tragic happening to them or their partner but it is vital to consider how your new family will be looked after in the event that one of the breadwinners income is lost. In these times of high credit card and loan debt, it is not just monthly income that needs to be considered but also the interest payments that stack up over time.
A vital first step is to calculate the amount of cover you will need, remembering of course that what was adequate as a single person is not suitable for a family. Once the amount of cover you need has been worked out it is possible to save a considerable sum on your premiums by making sure you shop around for the best deal. While sticking with the same company seems easier, there may be better deals out there simply by taking five minutes to compare quotes.
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