Life insurance help.

[KRTS]

I am 28 years old and have a 4 year old daughter. Both my parents died young and so I worry about doing the same. If it happens I would like my daughter to have some sort of security. There are so many different life insurance policies out there and I'm confused. I don't know how long I should take a policy out for, if it should be increasing or decreasing, should I get critical cover? etc etc.

Basically I want recommendations of best cover and where from? Thank you very much.

First think about how long you expect your daughter to be financially dependent on you. This will give you a guide as to what length of term is suitable. Term plans are generally much cheaper than whole of life plans.

Then think about how much income you have as a starting point for an appropriate level of cover; your earnings over that length of term is what you are trying to replace in essence, to ensure that she will be adequately provided for by whoever becomes her guardian.

A decreasing policy tends to be used where the risk is reducing, eg a repayment mortgage where outstanding amount of borrowing falls year on year. A policy that increases in line with inflation helps to maintain the real value of the sum assured over time.

Life only cover is cheapest. Critical illness cover costs more but it does mean that if the worst happens and you are diagnosed with one of a number of specific conditions then a lump sum payout means you have choices and have money available to pay for additional help, for example, or you can take as much time out as you need for recovery without worrying about having to go back to work too soon. Many CI policies also include a small amount of Children's CI cover too as standard.

I am a financial adviser but cannot give you a tailored recommendation without knowing a lot more detailed information, which is not appropriate on a public forum.