Find out if life insurance is the right option for you
There are a number of reasons why you might consider taking out life insurance. Whether you’re buying a house, starting a family or simply want to take care of your loved ones when you leave, this guide can help you decide the best options for you.
Key takeaways
Life insurance provides financial support for loved ones after death.
Consider your financial situation and number of dependents when determining coverage.
life insurance coverage you need is a personal decision, influenced by factors such as income, mortgage size, and family expenses.
Life insurance offers peace of mind that your loved ones will be taken care of financially in the event of your untimely demise. It's a contract between you and an insurance company: you pay premiums, and in return, the insurer pays a sum to your beneficiaries if you pass away during the policy's term.
The significance of life insurance
The importance of life insurance cannot be overstated. It's all about securing the financial future of your family when you're no longer there to provide for them.
One of the main ways to determine whether you need life insurance is to look at your financial obligations and how it would impact your family financially if you were no longer here. Would your partner manage the mortgage payments, household bills, or childcare costs?
Could your family maintain their lifestyle, afford university fees, or even cover the funeral expenses? These are the questions that life insurance needs aim to address, ensuring that financial struggles do not compound the emotional loss.
Key moments to consider life insurance
While life insurance cover isn't mandatory in the UK, it becomes a consideration at pivotal life stages, such as when you take on greater financial responsibilities. It's worth noting that premiums tend to be higher for older policyholders, so it may be wise to lock in a policy earlier in life.
Life insurance and your mortgage
Although many people question whether you need life insurance for a mortgage, it is not a legal requirement. However, some lenders might ask for a mortgage life insurance policy to be in place. This type of policy is designed to help survivors pay off the mortgage and other expenses, ensuring the family home remains secure.
The joys of parenthood and insurance
Becoming a parent is a life-changing event that often triggers the need for term life insurance. If you have children, you should think about what their financial situation would be if you were to pass away. This is especially important when children are young and depend on you for support. A term (or ‘level term’) insurance policy could be a strategic choice, with the term set to cover the years you expect to be the primary provider.
Did you know...
An estimated 46,300 dependent children (aged 0-17) are bereaved of a parent each year. That’s 127 children newly bereaved each day. Click here for more information
When life insurance might not be essential
For many people, getting life insurance is a useful protection policy. But this doesn’t apply to everyone. In some cases, other types of protection products (such as income protection or critical illness cover) may be more suitable.
If you're single with no dependents or your partner and dependents are financially secure without your income, buying life insurance might not be necessary.
However, life insurance with critical illness cover can offer a financial cushion if you're diagnosed with a critical illness, helping you manage living costs if you're unable to work.
Planning for the future
It’s also important to consider whether you may want to start a family in the future. Generally, life insurance policies for young people are cheaper, which means that purchasing a policy sooner rather than later could be a financially savvy move, whether that's single or joint life insurance.
Exploring types of life insurance
There are several different types of life insurance designed to suit various needs and budgets. Here's a quick rundown:
Level Term Life Insurance: Often called family life insurance, offers a fixed lump sum payout during the policy term, with premiums typically lower when you're younger.
Decreasing Term Insurance: Ideal for mortgage holders, the payout decreases over time, in line with your mortgage balance.
Increasing Term Insurance: Accounts for inflation, with the payout increasing annually, making it more expensive than level or decreasing term insurance.
Whole of Life Insurance: The most expensive option, it guarantees a payout whenever death occurs.
Joint Life Insurance: Covers two partners but only pays out after the first death.
Determining the right coverage
The amount of life insurance coverage you need is a personal decision, influenced by factors such as income, mortgage size, and family expenses. Our life insurance calculator can help you estimate the coverage necessary to protect your loved ones.
Selecting the appropriate policy
Wondering how much you need life insurance or what policy to choose? When it comes to selecting a policy, you have options, including whole-of-life policies or term policies. Our guide on life insurance policy types will assist you in deciding which is most suitable for your circumstances.
Life insurance with pre-existing conditions
Insurers will ask about any pre-existing medical conditions you may have. While these can affect your premiums, they usually don't prevent you from obtaining coverage. It's crucial to be honest about your medical history to ensure your policy is valid.
Paying for your policy
Life insurance premiums are typically paid monthly via direct debit. Upon your death, beneficiaries can receive a lump sum or monthly payments. The coverage amount you choose will influence the cost of your premiums. Some whole-of-life policies have an investment element, which can be accessed while you're alive, but it's advisable to seek professional advice before doing so.
Finding the right life insurance
Getting life insurance is about protecting your family's future after you're gone. For young individuals, there are affordable options available. MoneySuperMarket offers a platform to compare deals from UK providers, ensuring you find a policy that fits your needs and budget. Take the first step towards peace of mind by comparing life insurance quotes today.
Life insurance is not just a policy; it's a promise—a promise to your family that they will be taken care of, no matter what the future holds. Whether you're a new parent, a homeowner, or simply planning for the unexpected, life insurance offers a way to secure your loved one's financial future. With the right coverage, you can rest easy knowing that you've taken a significant step in protecting what matters most.
