6.1 - Life Insurance Basics: Protect Your Family’s Financial Future
Once you have set the wheels in motion on your escape plan, it's time to protect against disaster
Need the full picture? See the full escape map here
Insurance, Risk — and Leaving a Legacy
You’ve worked hard to build your escape plan.
You’re mapping your assets, investing wisely, and slowly breaking free from the money trap.
But what happens if disaster strikes?
We all want to believe it won’t.
But the reality is: bad things can happen — and they don’t always come with warning signs.
Let’s say you…
Pass away unexpectedly
Are diagnosed with a serious illness
Become unable to work due to long-term injury or disability
What happens to your plan then?
These aren’t just worst-case scenarios — they’re real financial events that can derail even the strongest strategy.
And when they hit, they usually affect your ability to meet three major costs:
1. Big Debts
Think mortgages, car loans, or personal loans — the kinds of debt that don’t disappear just because you can’t work.
2. Recurring Living Costs
Bills, food, utilities, school fees — your household still needs to function even if your income stops.
3. Dependents
If you die unexpectedly, would your partner, kids or other loved ones be financially secure?
That’s what this section is about.
In Part 6, we’ll walk through how to protect the plan you’ve built.
You’ll learn:
✅ What you need to insure against
✅ How much cover you might need
✅ What type of policy could work for you
✅ When to get it
✅ And how to protect your family and legacy in the long run
We’ll cover:
Life Insurance — to protect your family if you die
Critical Illness Cover — a payout if you’re diagnosed with a serious condition
Income Protection — replaces your salary if you’re unable to work for a long time
Wills & Legacy Planning — so your money ends up in the right hands, with minimum stress or tax
You’ve done the hard part: building your escape plan.
Now it’s time to make sure it survives you.
Let’s protect your plan.
And the people who depend on it.
6.1 Life Insurance – Protecting Those You Leave Behind
Why Life Insurance?
If you were to pass away unexpectedly, would your loved ones:
Be able to stay in the family home?
Cover daily living expenses without your income?
Have time to grieve — or be forced to scramble financially?
Life insurance is one of the simplest and most effective ways to make sure your death doesn’t trap the people you love in a financial nightmare.
How It Works
You pay a monthly premium.
If you die during the policy term, your insurance company pays out a lump sum or income to your beneficiaries.
Types of Life Insurance
Term Insurance (most common)
Covers you for a set period (10, 20, 30 years). If you die within that term, it pays out. If not — it ends, with no payout. There are 3 main flavours:
Level Term – Pays a fixed lump sum. Great for covering family expenses or future plans.
Decreasing Term – Payout shrinks over time. Often used to cover a repayment mortgage.
Family Income Benefit (FIB) – Instead of a lump sum, your family receives a regular monthly income. Helpful if you’re worried about them managing a big one-off payout.
Whole of Life Insurance
Guaranteed payout — because the cover lasts your entire life. As long as you keep paying premiums, it will pay out eventually.
More expensive than term cover.
Sometimes used for inheritance tax planning or leaving a legacy.
⚠️ Things to be Aware of:
Premium Reviews: Some policies look cheap to start with — but premiums jump every 5 or 10 years. Look for “guaranteed premiums” that stay fixed.
Inflation Trap: Fixed payouts lose value over time. If you want the payout to rise with inflation, you can pay for “index-linked” cover — but this comes at a higher cost.
Look for policies where the premium is fixed - i.e what you pay doesn’t increase with time. That way you beat the inflation trap - your payments effectively get cheaper over time.
When Life Insurance Is Most Needed
You probably don’t need life insurance if:
You're single, with no dependents
You already have enough wealth to cover your family’s future
But you should consider it if:
You have young children or a partner who relies on your income
You have a mortgage or large debts that would fall on someone else
Your household would face a sharp drop in income if you died
Where to Find Life Insurance
There are a few easy places to start your search:
Comparison Sites
Websites like:
Cavendish Online (often has lower-fee options)
…let you compare quotes from multiple insurers in one place. These are ideal if you know roughly what you’re looking for (e.g. 25-year level term, £250k cover).
Individual Insurers
You can also go direct to providers like:
Legal & General
Aviva
Aegon
Royal London
Others!
Some may offer online discounts or policy extras not found through comparison sites.
Need Help Choosing?
If you’re unsure what type of cover you need — or want to talk through specific situations (like leaving money to children, or insuring both partners) — a session with a regulated financial adviser or life insurance broker can help.
Some will charge a fee. Others are free, paid by commission if you take out a policy through them.
Either way, the peace of mind can be worth it — especially if you’ve got dependents, big debts, or complex needs.
Recap
Life insurance is a safety net for your loved ones.
Term cover is simple and affordable for most people.
Whole of Life can make sense for legacy planning — but costs more.
Check if your cover amount keeps pace with inflation — or not.
Don’t overpay for bells and whistles you don’t need.
What if you survive — but can’t work? next we’ll cover Critical Illness Cover, and how one payout can protect your finances when life takes an unexpected turn.
Up Next: Critical Illness Cover
How to protect yourself and your loved ones if you get a bad diagnosis
Disclaimer: This content is for informational and educational purposes only. It does not constitute personal financial advice. Everyone’s situation is different — if in doubt, speak to a qualified, regulated financial adviser.