Life insurance for parents: Protecting your family’s future

Becoming a parent is a major life milestone, and one that comes with a lot of responsibility. Decisions like where to live, what car to buy and even what career to pursue all take on a new layer of meaning – you’re no longer just looking after yourself anymore. 

But starting a family can also be one of the most rewarding and fulfilling decisions you’ll ever make. You get a front row seat to watching a tiny human grow into a self-sufficient adult, all thanks to your care, guidance, and a healthy dose of tough love every now and again. 

Whether having kids is simply on your radar or you’re imminently expecting a new addition to your family, getting organised is key to feeling in control. In this guide to life insurance for parents, you’ll discover exactly what type of cover could be helpful for your family, the benefits of life insurance and what to consider when taking out a policy. 

What is life insurance for parents?

Life insurance for parents can help protect your loved ones in the case of the unexpected. If you were to pass away or receive a terminal diagnosis suddenly, life insurance can step in to help ease the financial burden you leave behind to your dependants (such as your partner and children). 

While each policy and type of life insurance works differently, many families choose to take out life insurance to help cover costs that may arise when you pass away, such as:

• Everyday expenses to help your dependents and surviving partner maintain the same quality of life after you’re gone
• Mortgage or rental payments to ensure your family can keep living in the house you’ve called home
• Childcare and education costs to ensure your kids can continue learning at their preferred school 
• Medical bills in case one of your family members becomes unwell in the future. 
• Household bills and debts to ease the burden of any ongoing financial commitments. 
• Funeral costs to give your loved ones time and space to mourn the loss, without worrying about the final bill. 

What types of life insurance are available for parents and families?

Parents and families have a range of life insurance options to choose from, including fixed-term policies and optional cover. By figuring out how each type of life insurance works, you can make an informed decision about which type of cover is right for your family. 

Disclaimer: The products and information included below relate specifically to Real Insurance’s Life Insurance products and optional cover only. These details and benefits may differ from the products offered by other insurers – be sure to check the PDS for exact information, terms and conditions that may apply to your policy. 

Type of life insurance products 

Life insurance

Full life insurance is a type of life cover with no expiry date. This policy won’t expire after a certain number of years, meaning you will be covered for life, as long as you continue to pay your premiums. 

For parents, this type of life insurance can be a helpful way to ensure financial piece of mind, knowing that your loved ones are protected if the worst were to happen. Plus, it removes the need to find a new insurer or take out a new policy later in life, allowing for continuity of coverage across your entire life, depending on your circumstances. 

Term life insurance

As the name suggests, term life insurance (also known as life cover) comes with an expiry date. For example, Real Term Life Cover is a fixed-term policy that expires after 20 years or when you reach the age of 85 whichever comes first.

If you pass away or receive a terminal illness diagnosis during this time, you’ll be able to claim a benefit from $10,000 to $100,000 – designed to ease the financial burden of funeral costs and outstanding debts. 

For older parents, term life insurance can offer valuable peace of mind in case of the unexpected. By nominating your loved ones as beneficiaries, you’ll know your children and partner will receive a lump-sum payment in the event of your death, ready to help them maintain their quality of life even after you’re gone. 

Type of optional cover with Real Life Insurance 

Children’s Insurance 

For parents, children’s insurance can be a helpful optional add-on to consider taking out in addition to your life insurance policy. 

For example, Real Children’s Insurance Optional Cover allows parents to add-on cover for children aged between two and 17 years old, with the ability to choose a benefit amount from $20,000 to $50,000 per child. 

The aim of this additional policy is to ease the financial burden for parents in the event that a child passes away or is impacted by a defined serious illness or injury, with a single one-off payment designed to help cover the costs anything your family might need like medical expenses, childcare fees or even extra school tuition.

Total and Permanent Disability (TPD) Insurance 

As a parent, you want to do everything you can to safeguard your ability to work, care for your children and participate in the activities you love. But if you were to suffer an illness or serious accident that caused a total and permanent disability so you can’t work, life might start to look very different. 

Taking out Total and Permanent Disability (TPD) Insurance is a way of putting support structures in place to help your family navigate the costs of treatment and rehabilitation. Additionally, this lump-sum payment can be used to help your dependents cover other expenses, such as paying down your mortgage and making modifications to your home to support your disability. 

Typically, you can obtain TPD insurance through your superannuation, as a stand alone product or as an optional add-on policy that is added to your life insurance policy. For example, Real Total & Permanent Disability Insurance is an optional level of cover available only with a Real Life Insurance policy, allowing you to choose a benefit amount between $50,000 and $1,000,000, up to the maximum of 50% of the life insurance benefit.

Serious Illness Insurance 

Another optional life insurance add-on for parents to consider is Serious Illness Insurance . In the event that you receive a diagnosis for a serious illness ,such as certain types of cancer, a heart attack or stroke resulting in a specified permanent impairment, you can claim a lump-sum payout. 

For example, Real Serious Illness Insurance allows you to choose a benefit amount from $50,000 to $500,000,up to 50% of your life benefit amount), giving your family the financial support needed to assist with everyday expenses, medical bills, school fees and more. 

Real Tip: Wondering how Serious Illness Insurance differs from TPD Insurance? The key difference is when and how payouts are triggered. For Serious Illness Insurance, benefits are paid out following the diagnosis of a serious illness. For TPD insurance, benefits are paid out if you’re unable to work in any occupation due to a permanent disability, sickness or injury. Make sure to check the Product Disclosure Statement (PDF) of your life insurance policy to understand exactly how your level of cover works.

What are the benefits of life insurance for parents?

Raising a family comes with numerous costs, including childcare fees, healthcare costs and everyday expenses. In many households, having two working parents is essential to ensure enough income is coming in to cover these costs, particularly as the cost of living continues to rise. 

According to the Real Working Parents Report 2024, 1 in 2 (50%) of working parents feel it is currently unaffordable to have children. In fact, ‘financial stability and/or cost of living’ ranked as the top factor (59%) considered by couples when deciding to start or grow their family.

But what happens if a parent suddenly passes away or becomes permanently disabled and unable to work? While the future is uncertain, one thing you can do as a parent is to take steps to placet financial safety nets to protect your loved ones.

Life insurance offers a range of benefits for parents, including:

• Financial protection for children and dependants: Life insurance payouts can help your loved ones cover bills, everyday expenses, housing and education costs to safeguard their quality of life, no matter what the future has in store.
• Debt and mortgage support: Life insurance can give your loved ones peace of mind and housing security, knowing they may be able to continue paying mortgage and rental payments even if you’re no longer here to provide a source of income.
• Financial assistance for your partner: If your partner needs to reduce their working hours to care for you or your children, a life insurance payout can be a valuable financial safety net to cover bills, childcare and rehabilitation support.
• Proactive planning for future costs: With the right level of life insurance cover, you’ll know your loved ones will be able to pursue their preferred education pathways without worrying about how they’ll cover the cost of tuition. 

Life insurance for different types of parents

Whether you’re a first-time parent or expanding your family, life insurance can offer a range of benefits for different household dynamics.

• Life insurance for new parents: Becoming a parent for the first time can bring up a whole spectrum of emotions. With new responsibilities on your plate, proactive planning can help you manage the worries and anxieties that may arise as a new parent. Securing life insurance early in your family planning journey can ensure you secure the right level of cover for your growing family. Plus, taking out life cover early can mean you likely won’t need to pay extra loading or navigate exclusions to your policy due to your health. 
• Life insurance for single parents: As a solo parent, you’re the main breadwinner for your family. With your children financially dependent on your salary alone, life insurance can be a valuable way to safeguard their quality of life and provide financial security in the event of the unexpected.
• Life insurance for stay-at-home parents: Raising kids and running a household are incredibly valuable roles, even if they don’t come with a formal salary. If you were unable to work due to a permanent disability or suddenly passed away, these duties may need to be completed by someone else, potentially with a cost attached. That’s where life insurance can provide a practical safety net to your family as a stay-at-home parent. 
• Life insurance for elderly parents: It may still be possible for your elderly parents to take out life insurance if they don’t already have cover in place. However, it’s worth keeping in mind that taking out life insurance later in life can be more costly and may include exclusions, particularly for pre-existing health conditions.

Real Tip: Age can impact your options when it comes to securing life insurance. Generally speaking, insurance premiums tend to increase as you age. Insurers often have age caps on how long cover will last, with cover often only running until you’re in your 60s, 70s, or 80s ,depending on your policy,. The earlier you compare policies, the more options you’ll have to choose from to secure life insurance cover that works for your needs and budget. 

What to consider when taking out life insurance as a parent 

To help you weigh up your options and compare policies, use this handy comparison checklist to understand what factors to consider when securing life insurance as a parent. 

• How much cover do you need? Create a budget to map out your current and future household costs and factor in any major upcoming expenses as well as outstanding debts that would be left behind in the event of your passing. 
• What premiums can you afford long term? Consider how you’ll budget for life insurance premiums both now and into the future, and assess what factors might impact your premium costs over the years to come. 
• Is joint or single parent cover right for you? Weigh up whether it makes sense to take out a joint life insurance policy with your partner, or if two separate life insurance policies are a fit for your needs and budget. 
• Is term life insurance or full life insurance right for you? Think about whether a fixed-term policy (with an expiry date) or a policy with lifelong cover is the right fit for your needs – each comes with different benefits, age eligibility and more to consider. 
• What optional cover could be helpful for your family? Alongside your life insurance policy, it’s important to assess if optional cover (such as TPD Insurance, Children’s Insurance or Serious Illness Insurance) might be right for you. 

Ultimately, each type of life insurance comes with its own benefits and considerations. As a parent, comparing your options early and factoring in the evolving needs of your dependant children will help you make a proactive, informed choice that’s right for your family. 

If you’re looking for peace of mind and financial security for you and your loved ones, when they need it most. Real Insurance offers award-winning products and service. Find out more or request a quick quote online now.