Let’s face it, life insurance isn’t exactly the most riveting subject in the world. That said, if you don’t yet have one of these policies in place, it could be something you need to think about. Although none of us want to consider a time when we’re no longer around, it’s important to make sure your family’s finances would be protected in the event of your death. To help you decide whether or not you need one of these policies, ask yourself the following questions.
Do you have dependents?
If you have kids or a partner who relies on your income, the chances are you could benefit from taking out life insurance. Just think what would happen if you weren’t there to pay the bills. Would your loved ones be able to cover the mortgage or rent, council tax, utility charges and general living costs? If the answer to this is no, then it’s worth looking into life insurance. You can’t rely on the state to support your loved ones if you’re not around. The money they would receive from the government may be much less than you think.
On the other hand, if you don’t have dependents or you have a partner who earns enough to support your family, you might not need to shell out for this cover.
Are you already protected?
Some people have a form of life insurance included in their employee packages. Called ‘death in service’ benefits, this pays out a multiple of the holder’s salary if they die. It’s worth reading through the details of your employment contract to see if you have cover like this in place. Bear in mind though, these benefits only apply while you are working for the relevant organisation, so if you lose your job or switch employers, you will no longer be covered. Also, the sum that is paid out to your family if you pass away may not be enough. While death in service benefits can pay up to four times people’s annual salaries, some experts advise getting life insurance that gives payments of 10 times yearly earnings.
Getting the right policy for you
If after asking yourself these questions, you decide you do need life insurance, it’s important to get the right policy. You’ll have to choose between term life policies, which only pay out if you die within a fixed period of time, or whole-of-life cover that pays out no matter when pass away. Also, whichever style of policy you select, make sure you read the small print to check for any exclusions.
Not everyone needs life insurance, but for some families this cover offers a welcome safety net and it provides added peace of mind.