We’ve all heard of Life Insurance, but as it’s based on your own individual situation, knowing whether or not you need this cover can be confusing. To make things a little easier, the following steps outline a few of the most common scenarios in which having a Life Insurance policy is beneficial, and will help you decide if you need this type of Life cover too.
If you’re a parent:
If you’re a parent or about to be one you might want to consider taking out Life Insurance. Being a parent doesn’t come cheap – in the UK the estimated cost for raising a child from birth to age 11 comes in at a staggering £84,000 (or £110,500) and that’s all before college and university fees! If you were to pass away, these costs would not go away – your children would still need to be provided for. A Life Insurance policy would make this possible and, in paying a lump sum to your beneficiaries upon your death, it would provide welcome help with the ongoing costs involved in parenthood.
If you’ve got a mortgage:
If you’re a mortgage holder you may also want to consider Life Insurance, especially if this is shared with another person. In the event of your death, mortgage payments would still need to be met which, without your contribution, could put unimaginable financial pressure on the co-mortgage-owner. The lump sum payout from your Life Insurance policy could help alleviate the financial burden of this, helping to cover the monthly payments or even pay-off the mortgage entirely.
If you have any loans:
If you have any loans, such a car loan, a Life Insurance policy may also be beneficial. Like mortgage repayments, in the event of your death, these payments would not simply go away. A Life insurance policy could be used to pay this off so that your dependants would not be lumbered with the financial responsibility of these repayments.
If you’re self-employed:
If you’re self-employed a Life Insurance policy is a employee benefit you’re not likely to privilege from. Most companies provide some sort of life assurance for employees and whether it’s a death in service benefit or Life Insurance, these company perks can provide the necessary financial support for loved ones during an already difficult time. If however you’re self-employed, it’s unlikely you’ve put this protection in place for yourself. A Life Insurance policy would thus ensure you would receive the same protection as your company-employed counterparts.
Your motivation for buying life insurance will provide a good indicator of how long you need cover for. If, for example, it’s for your children’s college fund, once they’ve graduated, this cover may no longer be needed.
Consider taking a joint life insurance if you share mortgage repayments with another person.
Even if you’re not self-employed and are covered by employer benefits, it’s also worth considering taking out a separate Life Insurance policy. For example if you ended up switching jobs, you may lose this privilege and thus would not have any sort of protection in place.
Do your research, compare quotes from a range of different sites and consider a discount broker to help bring your premiums down.