The Complete Family Protection Plan: A Step-by-Step Guide for UK Parents

You know you should have a plan in place. Something happens to you and your partner, and your kids are protected. Your mortgage gets paid. Someone you trust raises your children. The money lasts.

But here is the reality: 62% of UK parents have no will. 54% have no life insurance. And almost nobody has proper income protection.

This guide walks you through everything you need, in the right order, with the actual costs and steps to get it done. No fluff. No scare tactics. Just the practical blueprint.

What Is a Family Protection Plan?
The Complete Protection Stack
Pillar 1: Life Insurance
Pillar 2: Critical Illness Cover
Pillar 3: Income Protection
Pillar 4: Your Will
Pillar 5: Lasting Power of Attorney
Pillar 6: Emergency Fund
Pillar 7: The 'If I Die' Document
Putting It All Together
Common Gaps and Mistakes
FAQ
Next Steps

What Is a Family Protection Plan? {#what-is-a-family-protection-plan}

A family protection plan is the complete set of insurance policies, legal documents, and financial reserves that ensure your family is looked after if something happens to you.

It answers three critical questions:

What happens if I die? Who raises my children? Where does the money come from? How long will it last?
What happens if I cannot work? Can we still pay the mortgage? How do we replace my income? For how long?
What happens if I lose capacity? Who manages my finances? Who makes medical decisions? What are my wishes?

Most families have gaps in at least one of these areas. Many have gaps in all three.

The Complete Protection Stack {#the-complete-protection-stack}

Here is what a complete family protection plan looks like:

Pillar 1: Life Insurance {#pillar-1-life-insurance}

Life insurance is the foundation of family protection. It pays a tax-free lump sum to your beneficiaries if you die during the policy term.

How Much Life Insurance Do You Need?

The standard formula:

Income replacement: Your annual salary x years until youngest child is 21 Plus: Outstanding mortgage Plus: Other debts (loans, credit cards) Plus: Childcare costs (if surviving parent needs to work) Plus: University costs (optional) Minus: Death in service benefit from work Minus: Existing life insurance

Example calculation:

Factor	Person A	Person B
Annual salary	£50,000	£35,000
Years to cover	18	18
Income subtotal	£900,000	£630,000
Share of mortgage	£150,000	£150,000
Childcare costs	-	£100,000
Death in service	-£150,000	£0
Total needed	£900,000	£880,000

For most families, £500,000-£1,000,000 per parent is appropriate.

Types of Life Insurance

Recommendation: Level term life insurance for 25 years, covering your total calculated need. Add decreasing term if you want separate, cheaper mortgage protection.

Life Insurance in Trust

Writing your life insurance in trust means the payout:

Goes directly to beneficiaries without probate delays
Falls outside your estate for inheritance tax purposes
Is controlled by trustees you choose
Cannot be accessed by creditors

Most insurers offer free trust services. There is no reason not to use one.

Learn more: How Much Life Insurance Do I Need?

Pillar 2: Critical Illness Cover {#pillar-2-critical-illness-cover}

Critical illness cover pays a tax-free lump sum if you are diagnosed with a specified serious illness.

Key conditions covered (varies by policy):

Most cancers
Heart attack
Stroke
Multiple sclerosis
Kidney failure
Major organ transplant
Parkinson's disease

Why families need it:

Life insurance pays if you die. But what if you survive a serious illness?

You might be unable to work for months or years
Treatment costs and travel add up
One parent might need to become full-time carer
Mortgage still needs paying
Children still need feeding

How Much Critical Illness Cover?

Minimum: Your outstanding mortgage amount. If diagnosed with cancer, you can pay off the mortgage and remove that stress.

Better: Mortgage plus 2 years of expenses. This gives you time to recover, adjust, or retrain.

Comprehensive: Mortgage plus 3-5 years of income replacement.

Standalone vs Combined Policies

Recommendation: For maximum protection, have standalone critical illness cover AND separate life insurance. If budget is tight, combined cover is better than no CI at all.

Pillar 3: Income Protection {#pillar-3-income-protection}

Income protection pays a monthly benefit (typically 50-70% of your salary) if you cannot work due to illness or injury. Unlike critical illness which pays once, income protection keeps paying until you recover or reach retirement age.

Why it is the most important protection most people do not have:

Covers ANY condition that stops you working, not just specified illnesses
Pays monthly like a salary, not a lump sum
Can last until retirement if needed
Covers mental health conditions (a leading cause of long-term absence)

Key Terms to Understand

Deferred period: How long you wait before payments start (typically 4, 8, 13, or 26 weeks). Longer deferred periods mean cheaper premiums.

Benefit period: How long payments continue if you remain unable to work. "To age 65" policies are best.

Own occupation vs Any occupation:

Own occupation: Pays if you cannot do YOUR job (better, more expensive)
Suited occupation: Pays if you cannot do a job you are suited to by training and experience
Any occupation: Only pays if you cannot do ANY job (cheapest, hardest to claim)

Income Protection Costs

Recommendation: Match your deferred period to your employer's sick pay. If they pay full salary for 3 months, choose a 13-week deferred period to save on premiums.

Pillar 4: Your Will {#pillar-4-your-will}

A will is a legal document that specifies what happens to your assets and who looks after your children when you die.

Without a will:

The government decides who gets your assets (intestacy rules)
An unmarried partner may receive nothing
The court decides who raises your children
The process takes longer and costs more

Essential Elements of a Parent's Will

Executors: Who administers your estate (1-4 people or a professional)
Guardians: Who raises your children if both parents die
Beneficiaries: Who inherits your assets and in what proportions
Trusts: How children receive their inheritance (not usually as a lump sum at 18)
Specific gifts: Particular items to particular people
Residuary estate: What happens to everything else

Mirror Wills vs Individual Wills

Mirror wills: Two wills that are virtually identical, leaving everything to each other, then to children. Common for married couples.

Individual wills: Separate documents that may have different provisions. Useful for blended families or where partners have different wishes.

Will Costs

Important: Marriage automatically revokes an existing will in England and Wales. If you have recently married, you need a new will immediately.

Learn more: Do I Need a Will? | Choosing Guardians

Pillar 5: Lasting Power of Attorney {#pillar-5-lasting-power-of-attorney}

A Lasting Power of Attorney (LPA) allows someone you trust to make decisions on your behalf if you lose mental capacity.

There are two types, and you need both:

Property and Financial Affairs LPA

Covers:

Bank accounts and savings
Paying bills and managing debts
Buying and selling property
Tax affairs
Business decisions

Can be used while you still have capacity (with your permission) or if you lose it.

Health and Welfare LPA

Covers:

Medical treatment decisions
Where you live
Daily care (washing, dressing, eating)
End-of-life decisions (if specified)

Can ONLY be used if you lack capacity to make these decisions yourself.

Why Young Parents Need LPAs

Common misconception: "LPAs are for elderly people."

Reality: Accidents, strokes, and brain injuries can happen at any age. Without an LPA:

Your partner cannot access your bank accounts
Nobody can sell your car or manage investments
Medical decisions default to doctors, not family
Someone must apply to the Court of Protection (£400+, takes months)

Meanwhile, your family is in crisis.

LPA Costs

Low income exemption: If you earn under £12,000 or receive certain benefits, registration is free.

Learn more: LPA Explained | Health vs Financial LPA

Pillar 6: Emergency Fund {#pillar-6-emergency-fund}

An emergency fund is cash you can access immediately for unexpected expenses or income loss.

How Much Do Families Need?

Minimum: 3 months of essential expenses Recommended: 6 months of essential expenses Conservative: 12 months of essential expenses

Essential expenses include:

Mortgage or rent
Council tax
Utilities (gas, electric, water)
Food
Insurance premiums
Minimum debt payments
Essential transport
Childcare (if returning to work requires it)

For a family with £3,000 monthly essential expenses:

Minimum fund: £9,000
Recommended fund: £18,000
Conservative fund: £36,000

Where to Keep Your Emergency Fund

Recommendation: Keep 2 months in easy access, 4 months in a notice account earning higher interest.

Pillar 7: The 'If I Die' Document {#pillar-7-the-if-i-die-document}

This is not a legal document - it is a practical guide for your family containing everything they would need to know if something happened to you.

What to Include

Financial Information:

All bank accounts (but not passwords stored in the document)
Investment and pension details
Insurance policies and how to claim
Debts and regular payments
Location of important documents
Accountant and financial adviser contacts

Legal Information:

Where your will is stored
Who your executors are
Solicitor contact details
LPA registration details

Practical Information:

Bills and when they are due
Household maintenance contacts
Children's school and activities
Medical information
Pet care requirements

Personal Wishes:

Funeral preferences
Messages for children
Charitable wishes
Family traditions to continue

Digital Information:

Email accounts (password manager recommended)
Social media accounts
Subscription services to cancel
Photo storage locations

Store this document securely but make sure someone knows where it is.

Learn more: The 'If I Die' Document Template

Putting It All Together {#putting-it-all-together}

Common Gaps and Mistakes {#common-gaps-and-mistakes}

Relying Solely on Death in Service

Death in service typically pays 2-4x salary. For someone earning £50,000, that is £100,000-£200,000. Sounds good until you calculate the real need (often £500,000+).

No Income Protection

If you are diagnosed with cancer and survive (increasingly likely), how do you pay the mortgage during 18 months of treatment? Life insurance does not pay. Critical illness might. Income protection definitely does.

Will Not Updated After Life Changes

Your will from 2015 does not account for:

Your new partner
Your second child
Your increased assets
Your changed wishes

Marriage automatically revokes a will. Divorce does not (but removes your ex as beneficiary).

No LPA Because "My Partner Can Handle It"

Without LPA, your partner cannot:

Access your bank accounts
Manage your investments
Sell your car or property
Make medical decisions on your behalf

Even with a valid will, they have no authority while you are alive but incapacitated.

Insufficient Emergency Fund

Three months seemed adequate before children. Now you have:

Less flexibility to take any job
Higher monthly expenses
More people depending on that fund

Six months is the new minimum for families.

Frequently Asked Questions {#frequently-asked-questions}

Key Takeaways

Complete protection requires all seven pillars: Life insurance, critical illness, income protection, will, two LPAs, emergency fund, and information document
Total cost is approximately £100-200 per month plus £400-800 one-off for legal documents - less than most families spend on takeaways
Start with life insurance and will: These protect your family immediately and are quickest to arrange
Income protection is the most overlooked coverage: It pays if you cannot work for ANY reason, not just death or specified illnesses
LPAs are not just for the elderly: Anyone can lose mental capacity - without LPA, your partner cannot even access your bank account
Review annually and after life events: Your protection needs change as your family and finances evolve

Next Steps {#next-steps}

Related Guides:

How Much Life Insurance Do I Need? - Calculate your exact requirements
The Insurance Stack for Families - Detailed breakdown of all protection types
Do I Need a Will? - The essential guide for UK parents
LPA Explained - Everything you need to know
Choosing Guardians for Your Children - Making the hardest decision
Legal Documents Every Parent Needs - The complete checklist

Last updated: January 2026. This guide is for informational purposes only and does not constitute legal or financial advice. Laws and figures are specific to England and Wales unless otherwise stated. Insurance costs are indicative and will vary based on individual circumstances.