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- Do I Need Life...Do I need life insurance?
When it comes to exciting purchases, life insurance is never going to top the list, and you could be asking yourself whether you really need it. But if you have children, a partner or other dependants who rely on your income to cover the mortgage or other living expenses, then the answer could be yes.
If you're the only earner in your family and your dependants are entirely reliant on your wage, what would happen if you died? It is, of course, not a nice thing to think about, but if the worst happened and you didn't have life insurance, your loved ones might not be able to cover things like mortgage repayments, household bills and school fees, never mind the family activities you would want to continue such as holidays.
Single parents are often the sole breadwinner for their family. So, as above, if this is the case, you may want to consider life insurance.
You may think that because you're in a couple and you both work, you don't need life insurance. However, this isn't necessarily the case. Even if you both work, it may be that just one of your salaries wouldn't be enough to support your household. In this case, life insurance may be necessary to ensure that your dependants would have the financial support they needed in the event of one of your deaths.
Stay at home parents often think that, as they're not an earner, they don't need life insurance. However, if you did pass away, who would care for your children during the day? Childcare can be a significant expense - would your partner be able to afford it? A life insurance policy could provide them with a payout that would help to cover childcare costs in these circumstances.
Not everyone needs life insurance. If you have few debts, no dependants, or enough savings that your dependants wouldn't struggle financially in the event of your death, it may be an unnecessary expense.
If you have a standard repayment mortgage, mortgage protection life insurance (also known as decreasing term life insurance) is designed to pay off your mortgage in the event of your death. With this type of life insurance, the amount of cover roughly decreases in line with the outstanding balance on your repayment mortgage.
Other types of life insurance - such as level term life insurance, which offers a fixed level of cover throughout the policy - can also be used to pay off your mortgage.
Whether or not you need life insurance to cover your repayment mortgage will depend on your financial situation. For example, if your dependants would be unable to pay the monthly mortgage repayments if you died, then you may need a life insurance policy.
Some employee packages include what's known as 'death in service' benefits, sometimes known as group life insurance. Essentially, this means that, if you died while employed by the company, your employer would pay out a multiple of your salary.
If this is the case, you may not need additional life insurance. However, it's important to evaluate whether or not the amount provided through your employer would be enough to support your dependants. This would depend on how much financial support they would need in the event of your death, as well as the size of the payout they'd receive from your employer. Remember, that if for example 4 times your salary was provided and you had young children, you need to ask yourself how long your partner could realistically make 4 times your salary last.
If you've decided that you do need life insurance, how do you know if you need critical illness cover critical illness cover as well? Critical illness cover can be integrated with your life insurance policy or purchased alongside it and will pay out in the event that you're diagnosed with one of the policy's named critical illnesses.
If you only had life insurance and were diagnosed with a serious illness that meant you couldn't work, the policy wouldn't pay out - it would only pay out in the event of your death. Therefore, critical illness cover is a good way to ensure that, in this circumstance, your loved ones may still have some financial protection. The conditions covered by critical illness insurance vary from provider to provider. When we provide you with a quote you can review the conditions covered by each provider to ensure they meet your needs.
If you still have any questions about life insurance, head over to our life insurance guides for more information. Alternatively, get a free life insurance quote today. Our life insurance comparison service is quick and easy to use. We'll even give up some of our commission we receive from the provider, making our rates more competitive than buying the same policy directly from the provider.
