Free Life Insurance

Post Office Money is offering parents with children under four years old free life insurance worth £15,000 for a year.

The catch is, the deal only pays out the cash sum if the policyholder dies during the term of the policy - meaning to benefit the worst has to happen in the next 12 months. 

The sum assured, £15,000, is also very low and for most families, wouldn't be enough to cover the mortgage or other bills for long. 

However, because it's completely free and doesn't require you to take out any other product from the Post Office, it could be a no brainer while you consider what other life insurance or income protection your family might benefit from. 

How does it work? - The product is sold and provided by The Royal London Mutual Insurance Society and is available to parents between the ages of 18 and 66 via the Post Office. 

Because there's no premium, policyholders will not have to provide bank details and the policy can be taken out at any time from the birth of the child until their fourth birthday. 

Parents can apply for one policy per child, subject to a maximum of eight children. It’s available to UK residents only, and you are not eligible if you have received any medical treatment for cancer in the past 12 months or have HIV. 

Post Office isn't the only insurer offering a taster life cover policy for free. 

Aviva has a nearly identical product, offering £15,000 worth of free cover for a year for parents aged between 18 and 44 who have children under four. 

Legal & General also has a very similar product, which offers £15,000 of cover for a year for free, but for parents with children up to five years old. It’s only available to parents up to the age of 45, however.

All three companies are keen to let you know that there are no charges involved with taking out the cover, but are there any catches? 

Phil Jeynes, of life insurance comparison site UnderwriteMe, said: ‘Since it’s free there can’t really be any downside to this product; the only risk I can think of is any parent believing that this could provide adequate cover on its own.

‘The likelihood of dying as a healthy young person in a specific 12 month window is extremely low so I don’t foresee many claims being made. 

'Hopefully it serves as a useful tool to get young families thinking about the real need for protection, beyond this limited offer.’

This is Money verdict - In the long term Post Office is unlikely to have to pay out on many claims on this product, but just because the risk is low doesn’t mean new parents should not be looking at life cover.

While the product is downside-free, £15,000 is also unlikely to cover the bills in the event of the policyholder’s death. 

This may be a useful product for some, but new parents should consider looking at life insurance plans to ensure that they get the right cover for them and their families.

Emma Thomson, of independent protection adviser, Life Search explained: ‘It's a great opportunity for parents to get something in place and they may hopefully then go on to take any other cover they may need.

‘The only pitfall is if parents may think this is sufficient cover, rather than a small freebie that gets you thinking about what you really need.’