In the second of a series of articles, we look at how your insurance needs may change over your lifetime:
Empty nesters and families with grown up children
Your family’s insurance needs and obligations will evolve over time. Periodically reviewing those needs is necessary to ensure that you and your dependents are properly protected.
As your children become independent, you will no longer need to drive them from place to place. However, the downside is that you now might be having to help finance their own car and that includes car insurance. Latest figures suggest that the average cost for car insurance for a 17-22 year-old is close to £1,300 per year. (Source: MoneySavingExpert.com).
There are ways to reduce costs, however, without reducing cover. Under-25’s can take advantage of a telematics-based insurance policy (also known as black box policies) which reward the driver for safer driving and allow them to build up that all important no-claims bonus. You can contact your A-Plan branch for further advice, speak to our specialist young drivers team directly or for learner drivers insurance, you can also visit our website to buy online.
When children leave home, your home insurance might also need some attention. One of the first reasons children leave home is to attend higher education. In the first year, many opt to live in halls of residence or some will move in to a rental property with friends. Whichever they choose; you will need to make sure that they have adequate insurance. A lot of university halls will already offer a basic level of insurance. However, this free student insurance may only cover a limited amount of items and normally they must be in the student’s room at the time of the crime, with doors and windows fully secured. So, for example, if a laptop is left in a communal area and it’s stolen, it might not be covered.
It’s also always worth checking if students are covered under their parents’ contents insurance policy. If this isn’t the case, it might be worth calling up and asking for a quote to be added on, as it could work out cheaper than a completely separate policy.
Some items may cost extra to protect – Students often own plenty of items which are attractive to thieves, averaging around £800-£1000 (MP3, phones, laptops etc.) High value goods may need adding as separate items on top of your contents insurance policy, particularly if they are often taken outside student accommodation.
Your local A-Plan branch can advise if you want more information or a quote.
If your kids leave home on a permanent basis, they will be responsible for their own insurance. At this time, you may like to review your own sums insured. You may find that once a family member has left with all of their clothing and personal effects, you can reduce the sum insured. It’s best to adopt a scientific approach when valuing contents for insurance purposes. Go from room to room, making notes and adding up items if you had just purchased them as brand new.
Once children have gone, many homeowners turn their attention to improving their own property. If you’re thinking of renovating or extending your home, it’s also vital to speak to your home insurance provider to ensure that your policy also covers what you’re having done to your home. If you don’t, and something does unfortunately happen, you might not be covered.
Even though the children have flown the nest, there are still many reasons why you would want to continue with your life insurance, or at least revise your cover.
If you’re continuing to pay a mortgage after the children have moved out, or need to consider releasing equity from your property to pay for your children’s further education, weddings or provide a deposit on their own home; you’ll still need to cover the risk of your family being burdened with the debt.
If you’re in a good position financially and you can support your children’s future in that way, and have paid off your mortgage, you may want to think about covering your tax risk – At 40%, inheritance tax could wipe out a good majority of your estate, so a whole of life policy could help.
Of course, with less financial dependents, you may not want to cover the same amount as previously. There are many options available so you should talk to a knowledgeable life insurance broker to find out what type of policy best suits your needs and the needs of your loved ones.
With the kids gone and a lot more disposable cash available, you can travel to destinations you’ve always dreamed about. Don’t forget your travel insurance! Especially, for those more exotic destinations.