Life insurance provides a financial safety net for your loved ones if you die 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, as the worth of having it is more than just about money – it is about protecting the people you love should you die.
It is usually straightforward to obtain a life insurance quote and you can 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. You can often combine buying a life insurance policy combined with critical-illness insurance or serious illness benefit to cover you if you are diagnosed with a serious or life-changing health complaint.
Here are five good reasons to have life cover:
1. It is surprisingly affordable
Contrary to what most people imagine, life insurance can be an inexpensive way to protect you and your family. Life insurance can be as cheap as £5 per month.
You can buy life insurance yourself without guidance, online or over the phone with no fees to pay and just pay for the cover, or pay for advice from a specialist. The extra cost of a specialist adviser might pay dividends in the future by helping you to reach a decision that works best for your situation, but it is by no means a must.
2. It offers protection and peace of mind
Life insurance gives money to your loved ones when you die. This means that they will be protected from things that could happen to them should they lose your income, such as having to move house, or getting into debt from other financial demands.
Your loved ones might use money 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 will ensure they’re taken care of if you die.
Some types of life insurance give a much-needed lump-sum payout. 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 unbearable, and a lump sum 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 pay the monthly payments and you have given all the information required honestly and openly in your application, your dependents will be guaranteed a payout in the event of your death.
You don’t have to change anything during the term of the policy, although 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
Nobody can know what will happen in the future. Hopefully your family will never need to claim on the policy, but having the protection means they won’t have to rely on another source of income or your savings if you die.
When you are thinking of buying life insurance it can be difficult to pay for something that 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 lump-sum payout
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 premium can give protection and the potential for a payout worth hundreds of thousands of pounds.