The latest statistics suggests it costs over £50,000 to raise a child up to the age of 18, and that doesn’t even take into account university fees.
That’s a huge amount of money and one that will come as a shock to many parents. Of course it won’t put people off starting a family but surveys like this do highlight the high costs involved in bringing up children.
When money is tight people need to think about how they can support their families in the best way, and protect themselves against any financial difficulties that might crop up in the future. Making sure the family has a financial safety net in place is one way. Taking out a protection product means families will have peace of mind that if the unthinkable happened their financial needs would still be met.
But let’s face it. In today’s economic climate when people are keeping a much closer eye on the purse strings, there will be even less enthusiasm for investing in a protection product. So the task providers and advisers face is getting people to understand that it is possible to take out cover without creating a massive dent in the finances.
Family income benefit (FIB), for example, provides a regular tax free income and is a cost effective way of setting up cover. It won’t cost very much more to add it to a mortgage protection plan and will mean that should the worst happen, your clients won’t just be protecting their mortgage but their everyday living expenses too.
This option could provide the perfect solution for young families on a budget, who are looking for a cost effective way of taking out insurance now, but who may want to revisit their options at a later date.
Tens of thousands of parents take out protection insurance but many more don’t bother. It’s no surprise given the current financial climate that people are reluctant to part with their money. But if they took time to talk to a financial adviser and look at all the options available, they will understand that protection insurance is a vital part of sensible financial planning and it is affordable.
Ian Smart is head of product development and technical support at Bright Grey