03 December 2019

Five reasons life insurance is worth the cost

8 min read

 

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Life insurance provides a financial safety net for your loved ones if you die while covered and can give them peace of mind at a difficult time.

The cost of life insurance varies and this can mean many people don’t think about buying any at all. But it can be a mistake to not have life insurance, because the money it provides can help protect the people you love when you die.

Typically, getting a life insurance quote can be a pretty straightforward process, although it can sometimes be more complicated, involving health questions and underwriting. You can also decide how long you need it for and how much cover you need. 

There are different types of life insurance; some provide a fixed amount of cover for the whole term of the policy while others slowly reduce the amount of cover over time. Often, you can combine buying a life insurance policy with critical illness insurance or serious illness benefit to cover you if you are diagnosed with a serious illness such as a heart attack or stroke. The list of illnesses and the definitions used varies between insurers so check what illnesses are covered before buying.

Here are five good reasons to have life cover:

1. It can be surprisingly affordable

Contrary to what most people imagine, life insurance can be an inexpensive way to protect you and your family. It can be even less than you think.

You can buy life insurance yourself without advice. You can buy it online, over the phone, or via a paper application. If you choose to buy it through a financial advisor, then expect to pay a fee. The extra cost of a financial adviser might pay dividends in the future by helping you to reach a decision that works best for your situation.  

2. It offers protection and peace of mind

With a policy in place, life insurance could pay out money to your loved ones when you die. They might use a payout from a life insurance policy to pay off an outstanding mortgage or cope with regular bills. If you have children, a partner or others who depend on you financially (such as an elderly relative), it can help make sure they’re taken care of if you die.

Some types of life insurance pay out a much needed amount of money. This can be useful for loved ones after your death because it will be a very difficult time, emotionally and financially. Having to worry about bills and debts while coping with the loss of a loved one is difficult, and a single amount of money can help to ease financial worries.

Also, some policies pay out early on the diagnosis of a terminal illness. This would enable you to spend time with loved ones without having the worry of wondering how they will cope financially when you are no longer around.

3. It’s guaranteed

As long as you continue to make the monthly payments and you have given all the information required honestly and openly in your application, your dependants will be guaranteed a payout when you die.

You might want to check every couple of years that your cover is enough to take care of any outstanding debts or other expenses.

4. You never appreciate its value until you need to claim on it

When you are thinking of buying life insurance it can be difficult to pay for something that you think you might not need and that you personally won’t benefit from. However, you have peace of mind knowing that if the worst were to happen, your family would benefit from your decision to protect them financially even if you are no longer around.

5. You would need a lot of savings to get the equivalent payout amount

You could save or invest to build up an emergency fund. However, most people don’t have enough surplus cash or the time to build up enough money. A relatively small monthly payment can give protection and help the family with bills or debts.

Life insurance from Royal London