Many couples who decide that they want to have children are waiting until later in life to do so. Some of the reasons around this involve money matters and certainly once you make the decision to be a parent you have greater financial responsibilities. “What if” something happens to the key household earner?
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
We are becoming a nation of older parents
Reasons for this, include:
- a greater focus on building careers
- wanting to be able to save enough money as a deposit for their first home before having children
- wanting to be more financially secure before starting, or expanding, their family
The average age that couples decide to have their first child has for the first time reached 30 years old. This means we are becoming a nation of ‘older’ parents.
Whilst, thirty is nowhere near being ‘over the hill’, it is important that at any age, you plan for your family.
Particularly, making sure that they will be financially secure if something were to happen to you or your partner.
Don’t ignore it
It’s not a conversation that anyone looks forward to having, but it is imperative that you and your partner have the ‘what if’ conversation.
This should involve looking at your current financial situation and making the decision if something were to happen (death or serious illness) if you or your partner would be in a financially secure situation to be able to cover things like rent or mortgage payments and other outgoings.
A meeting with a financial adviser can help ease the process of discussing financial matters such as this.
Bereavement payments
The system of bereavement benefits changed in April 2017.
The new system is called the ‘Bereavement Support Payment’ (BSP). It is available to those under 45 and depending on certain criteria you could receive:
Circumstance | One-off payment | Month payments (18 in total) |
With children, or pregnant | £3500 | £350 |
Without children | £2500 | £100 |
The Bereavement Support Payment is not means-tested and it is tax free.
Whilst, these payments will provide some financial relief, it only provides assistance for the short term. You can make extra provisions for your family, by taking out a Family Income Benefit policy.
Family Income Benefit policy (FIB)
A Family Income Benefit policy is a form of life insurance. Whilst not many people know about it, it may provide some comfort and financial assistance for your loved ones in the long term.
If the named policyholder were to pass away the policy is designed to pay out a regular income up to a specified date. These payments are intended to go towards replacing some of their lost income. The payments are made monthly and are tax free.
The payments can be arranged so that they are similar to the income of the policyholder. Some may decide to receive a higher amount each month to give their family a ‘buffer’ for unexpected expenses, however, this means that the monthly premiums will be higher.
How does FIB pay-out?
If the claim is successful, the policy will pay out until the policy end date. So, if you have taken out a twenty-year policy and a claim is made ten years into the policy, the policy will pay out for the remaining ten years.
It’s important to note, that if no claim is made there will be no pay-out from the policy.
The best thing is to speak to a financial adviser who can discuss your family finances and advise the best course of action to offer you the right level of protection.
Is your family financially protected?
Dental & Medical Financial Services have been helping doctors and dentists with family financial planning for over 25 years.
Tel: 01403 780 770