Do I Need Life Insurance?
Many people will not have considered life insurance particularly if they are young. However, in some ways it is best to buy life cover whilst you are still young as the premiums will be lower. There may be other reasons why you need to buy life insurance and we will consider them below.
Provide for Dependants
Life insurance cover is important for anybody with a partner and children to support, but some people may also have other dependants such as elderly or disabled relatives. When selecting life cover you need to ensure that it will pay everything that is normally covered by your salary, such as regular monthly outgoings. However, you also need to leave sufficient to cover any debts that you might leave and to cover any other expenses such as upcoming university fees for your children. Another item that will need to be paid for is funeral costs which can be quite high.
The amount of benefit should be sufficient to cover for the long-term and not just a couple of years. For example, if you have small children, and your partner stays at home to look after them, you may want to leave enough for your partner until (s)he is able to return to work. If your partner is on a low income, you will need to provide sufficient to supplement that income until your partner reaches retirement age.
Covering a Mortgage
When you take out a mortgage to buy a home, the mortgage provider will usually require you to take out life insurance to cover repayment of the loan in the event of death. As this type of life insurance will be linked to the mortgage, you may want to supplement it to ensure that your dependants can also meet any other payments or outstanding debts if you aren’t around anymore.
As well as allowing for payment of any regular outgoings as described above, your life insurance should be sufficient to cover the full outstanding amount of your mortgage. This is so that the mortgage can be completely paid off if you die. Otherwise, if mortgage repayments cannot be met, the mortgage provider can repossess your home and this will leave your dependants homeless.
Unfortunately, although some mortgage providers insist on life insurance or an endowment policy, not all of them do so and there are still many homeowners who do not have any means of repaying their mortgage in the event of the death of their spouse or partner.
Choosing Life Insurance
As well as deciding the amount of cover that you need, you will need to consider a number of other factors. For example, do you want the cover to last for the rest of your life or for a specified term? Do you want life cover for your life only or would you prefer a joint life insurance policy to cover you and your partner? Do you want your premiums to be fixed or regularly reviewed?
If you want life cover that has a cash-in value, you would be best to opt for life assurance or an endowment policy rather than life insurance that just pays out a lump sum on death. You may also want to consider critical illness cover, which pays out a lump sum in the event of certain critical illnesses as well. To find out more about types of policies and optional extras, please refer to our article, ‘Life Insurance Policies and Options.’
It is also advisable to check any terms under the life insurance plan, for example, what will happen if you cancel the policy, and will you still be covered if you fail to make the monthly payments on time?
We have many types of life insurance cover available through numerous well-known life insurance companies. We can also offer a number of options, such as reduced premiums for a healthy lifestyle, or a waiver of premium if you are too ill to work. To obtain some life insurance quotes, please fill-in our quick and easy online form.