When is Life Insurance necessary, and when is it not?
At its best, good Life Insurance cover is an effective way of granting peace of mind, both to yourself and to those closest to you whose lives would be impacted by your death. It’s something critical, which you nevertheless hope you never need.
That being said, there are some times when Life Insurance is less required than others. It’s important to carefully consider exactly what type of cover you need, how much, and how long it should run. Rushing into the decision, or failing to shop around and just taking the first offer you’re given can result in overpaying for your Life Insurance, not being properly covered, or potentially both.
When don’t you need Life Insurance?
Considering that the purpose of Life Insurance is to cover the lost income of a household’s breadwinner, or anyone with financial dependants, it stands to reason that Life Insurance isn’t necessary when the loss of that income wouldn’t pose a problem to anyone.
One of the major benefits of Whole of Life Insurance is that it runs (as the name suggests) until you die, or until you stop paying your premiums. It’s different to Term Life Insurance, which you can outlive. You might think, ‘what’s the point of a Life Insurance policy which you outlive?’
The answer comes in the form of another question; what’s the point of a Life Insurance policy that no longer serves its purpose? As time goes by and you develop savings, investments and other income streams, it may be the case that the impact of your death is no longer debilitating enough to make a Whole of Life policy worthwhile.
This goes for your children too. Parents want to see their kids prosper, and if the time comes when they’re able to look after you, Life Insurance premiums may become an unnecessary expense.
On the other hand, the size of your estate might shrink over time to the point where your death would no longer trigger inheritance tax, but would still be enough to cover whatever financial impact your death would have on your family.
A responsible insurer will take your situation into account when advising you about what Life Insurance works best for you, and advise the best possible arrangement. If you have no dependants or your financial needs would all be covered if you died, it may be the case that you simply don’t need it.
When do you need Life Insurance?
Even if you decide Life Insurance isn’t right for you at one point in life, take care to re-assess things from time to time.
Major life changes can bring their own upheavals and cause you to re-assess things in great detail. With so much going on, the thought of checking up on your insurance needs can slip your mind, but it pays to stay on top of things.
Buying a house and getting onto the property ladder is the first step in a lifelong series of investments which, hopefully, will one day net you the home of your dreams. It pays to protect that with the proper cover. Many mortgage providers will insist on you having Life Insurance as part of the mortgage itself, but shop around and don’t automatically go with the policy they suggest, see what’s best for you.
Getting married can lead to things like joint credit cards, car finance and sharing household bills. Sorting out Life Insurance early on in a marriage might not be the most romantic way to spend time, but it means you or your partner could be financially protected if one of you were to die.
Having kids means taking on a huge responsibility to make sure the next generation is safe and happy. Your death could leave them without that protection, or cause your surviving partner extra worry by having to cover two sets of income. Life Insurance could help to reduce that worry.
Changing jobs is another big life change that people often neglect to think of when it comes to re-assessing Life Insurance needs. In reality, it changes the entire equation surrounding how you support yourself. You might now be the chief breadwinner, or you might have taken a wage cut in exchange for more fulfilling work. Either way, think about how that might change matters if you were to die.
In short, even when the time might not be right to set up Life Insurance, it always pays to keep an open mind about it. At Beagle Street, we’re proud to offer honest, upfront information about how people could protect their loved ones financially against whatever life might bring.
Get in touch today and speak to an expert, or use our online Life Insurance quote tool for a fast, no-obligation quote.