The director of Leicestershire-based chartered financial planners Rowley Turton was speaking after chancellor George Osborne announced changes to allowances that could see parents who lose a partner being £100,000 worse off.
Mr Rowley said it was important for people to regularly review their protection arrangements, adding: “In light of the government slashing bereavement benefits it is even more important that people, especially those with young children, review their life assurance arrangements. Fortunately life assurance for those in good health is surprisingly cheap.”
According to statistics from life and pension provider Aviva, every 22 minutes a child in the UK loses a parent. The changes announced by the government would mean parents who lose their partner after April 2016 would be entitled to a lump-sum payment and then lower, regular payments for a year.
Mr Turton added: “The increase to the lump-sum from £2000 up to £5000 is clearly to be welcomed, but the regular payments are lower and most limited to one year only.
“It is important that parents speak to an independent financial adviser, not only to review their cover and obtain a good deal, but also for the help and advice in completing the forms and the use of trusts to minimise inheritance tax and ensure families are protected.
“For new parents many IFAs can help make a small step in the right direction by arranging £10,000 of free life cover if a parent dies on or before their baby’s first birthday. If both parents apply for the cover, this could mean £20,000 of life cover.”
His comments came as Zurich enhanced its critical illness cover, adding improved protection for patients with breast cancer and partial payments on six medical conditions. It is also increased the number of conditions covered from 40 to 48 and 10 definitions approved by the Association of British Insurers applied to children who receive free cover under their parents’ plan.
In 2012 Zurich paid out £173m in protection-related claims. This included £60m for CI claims, £14m for income protection claims and £99m for death claims.
Alan Lakey, partner of Hertfordshire-based Highclere Financial Services, said: “Added value is most easily identified by increasing the numbers of critical conditions, going beyond the ABI model wordings and including partial payments for higher risk conditions.”