We list 8 reasons why you should think about getting life insurance.
Yes, this article is a little on the biased side – we are going to list 8 reasons why you should think about getting life insurance.
As the Money Advice Service says, not everyone needs life insurance.
However for a lot of people -especially if you are the main ‘breadwinner‘ of the family -there are a lot of reasons why you might want to consider setting up a policy.
If any of the following reasons hit home with you – it is certainly something you might want to think about getting sooner rather than later.
What is life insurance?
Before we start our list, let’s quickly look at just what is life insurance?
Life insurance is a financial product that can pay your dependents money, either as a lump sum, or as regular payments, in the unfortunate event of your passing away.
There are two main types of life insurance:
Term Life Insurance
Term Life policies run for a limited amount of time – commonly 5, 10, or 25 years. These policies only pay out if you die during the specified term. There will be no lump sum paid at the end of the policy term.
In comparison, whole-of-life policies will make a pay out to your dependent whenever you pass away, as long as you keep up with your life insurance payments.
Here is our list of 8 reasons why you should consider getting life insurance:
- 1 – You Can’t Predict The Future. As much as we like to feel like we are in control of our life and our future – no one can ever be 100% sure about what is coming round the corner. One minute you can have a great job, great prospects, and life can seem like everything is perfect. Yet it only takes one freak accident or change in circumstances to flip everything on its head.
- 2 – Funerals Are Expensive. The average cost of a funeral is £3,600 in the UK. This is more than a lot of people have saved up, and can be a severe burden to your family if they have to pay for this at the same time as losing the family’s main source of income. Almost daily we see examples of people having to resort to set up GoFundMe pages just to try and cover the cost of an unexpected funeral. This site covers the cost of buying a headstone, which on its own can range between anything from £478 to £1734.
- 3 – Life insurance protects your family if the worst should happen. We all want what is best for our family, and unfortunately if you pass away you will no longer be able to support them – unless that is you are covered by life insurance – in which case your family will be covered either with a lump sum payment or regular payments, as per the terms of your policy.
- 4 – You cannot rely on the government to protect your family. Even the Money Advice Service – which is itself funded by the government – states this fact very clearly. In the event of your passing away, you simply cannot expect your family to be financially secure if they have to rely on government benefits.
“You can’t rely on the government to take care of your family – the money they would get from the state is much lower than you’d probably expect. If you want to provide for your family financially if you die, life insurance is a must.” – Money Advice Service website.
- 5 – Peace of mind. Knowing your family will be looked after should the worst happen can provide a level of peace of mind that you would not have without life insurance.
- 6 – Protects your business. Some types of life insurance cover can also protect your business if you are the owner of a company, such as Business Protection Insurance or Business Life-Cover Insurance.
- 7 – You have an outstanding mortgage debt. If you are still paying off your mortgage. In the UK, this around 2 in 5 households according to ONS data from 2013.
- 8 – A US article we read suggested that having life insurance could potentially improve your credit score. From our research however, we were unable to confirm this was true in the UK – yet it is certainly possible, or could be something that happens later as the UK catches up. Either way, life insurance certainly provides more financial security to your family.
We hope you have found our article useful, please leave any comments or questions in the box below!
Always remember, this site does not provide financial advice. You should speak to a qualified financial professional before making any financial decisions.
Main image adapted from a photo: “Kids playing at Edwin Pratt Park, 2002″ @ Flickr – CC 2.0.