What is Life Insurance?
Life insurance is a policy that pays your dependants money as a lump sum, or as continual payments when you die. It is designed to give you the peace of mind that your dependents will be financially secure after you are gone. This helps your family to cover funeral costs, and continue to pay the bills after you are gone. Like other insurance policies, such as car insurance and home insurance, it is paid on a monthly basis. The total money paid to your family depends on the level of coverage you purchase. The amount you pay each month varies depending on the sum that will be paid out on your death. It may also depend on your health at the time of taking out the policy. Life insurance policies are available from a number of different providers and the terms of the policies can vary significantly. It is a good idea to discuss life insurance with someone who can give you advice on the policies available, to help you decide which one suits you best.
Do I Need Life Insurance?
As you get older you may get married, start a family and build your career. This is when you will likely start to consider the importance of life insurance. If your children, partner or other relatives rely on your finances to pay the mortgage and other bills, then it is highly likely that you do need life insurance, as the policy would protect your family financially after you are gone. A life insurance policy is essential in order to have a solid financial plan. Life insurance can be reasonably low cost, so policies are now available to more and more people. In addition, it is reassuring to know that your family will be protected financially when you pass away.
How Much Does Life Insurance Cost?
Life insurance policies can be extremely good value. Many are as little as a few pence per day, and this is a very low price to take care of your family after you are gone. There are a number of factors that will affect the cost of a life insurance policy. The biggest factor is how much you require the policy to pay out in the event of your death. A policy for £10,000 will have lower monthly payments than a policy for £30,000. Some companies perform a medical exam which includes your height, weight, blood pressure, blood tests and urine sample. It is also common to ask about your lifestyle habits with questions about exercise, smoking, alcohol intake, diet etc. In recent years, there has been a rise in the number of life insurance companies offering policies without a medical exam.
Look After Your Family
If you work full-time and have a salary your loved ones will depend on your income for financial support. This is particularly true if you have a career with a high income. If your family rely on your salary as the main source of income for paying the bills then life insurance is vital for replacing your salary when you are gone. Families with children or disabled family members would find it incredibly problematic to manage without financial assistance. Two-income families can find themselves with not only less income, but new and demanding childcare arrangements, on top of dealing with grief. Raising children alone would undoubtedly be a challenge, and no amount of money can replace a parent. But financial security will go a long way in providing for children.
Funerals are very expensive, with the typical value reaching over £8,000 for all expenses, according to the 2018 Cost of Dying Report. This includes the coffin and burial or cremation, doctor, memorial, notices, flowers, order sheets, transport, a venue, food and legal procedures. Even a basic funeral with no additions can cost around £4,000. Prices have gone up more than 50% since 2007, indicating that we face even further funeral price increases by the time we pass away.
Pay Off Debts
One of the biggest and most important financial commitments we make in life is our mortgage. The last thing your loved ones will need after you are gone is to be burdened with a monthly mortgage payment without your financial assistance. If mortgage payments are missed and your loved ones fall into arrears, they risk having the home repossessed. This potentially puts your family at risk of becoming homeless. Therefore it is extremely important to ensure that mortgage payments will be covered in the event of your death, and a life insurance policy is a perfect way to do this. Any other debts you have such as car finance, credit cards and loans, can also be taken care of with a life insurance policy.
As a parent, it is important to know that your children are safe and this includes after you have passed. A life insurance policy will give your children the financial security to attend university, or start a business. They may use the money towards their first home or a wedding. This is especially useful if you don’t have any other financial assets to leave to your children. You can name your children as beneficiaries and make your life insurance policy their inheritance.
Peace Of Mind
It is impossible to know when we will die. Anything could happen at any time, and we have all heard stories of people taken passing unexpectedly. What we do know is that it is inevitable that at some point we are all going to pass away. It could be next week, next month, or in forty years but it is a certainty. When we lose someone we love and we are experiencing grief, money will not take away the pain we feel. But having the finances taken care of during such a difficult and emotional time is vital. A grieving family needs financial security. A life insurance policy will give you that reassurance that your loved ones will be safe and secure after you’re gone.
Looking to get yourself some Life Insurance? We can help you find the right coverage for a great price. Just complete the contact form on our Life Insurance page and we will be in contact with you shortly.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.