When it comes to exciting purchases, life insurance is never going to top the list. However, it could be an essential purchase if you have a new-born or a toddler, children of school age or a partner who depends on you financially.
If you're left wondering "do I need life insurance?" read on to find out which types of people commonly need life insurance, as well as for answers to some questions you might have.
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. However, if the worst happened and you didn't have life insurance, your loved ones may not be able to cover mortgage repayments, household bills and school fees.
Single parents are also often the sole breadwinner for their family and as such may wish to consider life insurance for single parents to ensure their children are provided for.
If you are a couple and both work you may think that you don't need life insurance. However, this isn't necessarily the case. It may be that just one of your salaries would not be enough to support your household requirements. In this case, life insurance for dual earners may be appropriate to ensure that your dependants have some financial support in the event of one of your deaths.
As a stay at home parent you may think you don't need life insurance. However, if you did pass away, how much would it cost to keep the household running? Childcare alone can be a significant expense and a life insurance policy could provide a payout that would help to cover these and other costs in such circumstances. Read more about life insurance for stay-at-home mums and dads here.
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 decreases in line with the outstanding balance on your mortgage.
Other types of life insurance such as Level Term Life Insurance, which offer a constant level of cover throughout the policy, can also be used to pay off your mortgage in the event of your death. Level term policies may be more suited to providing protection for interest only mortgages where the capital outstanding remains the same.
Some employee packages include what's known as 'death in service' benefits. Essentially, this means that if you died while in service, your employer would pay out a multiple of your salary.
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 would receive from your employer.
If you've decided that you do need life insurance quotes, you should consider if you need critical illness cover as well. Critical Illness Cover can be purchased with your life insurance policy and will pay out in the event that you're diagnosed with a specified critical illness.
If you only had life insurance and were diagnosed with a specified critical illness the policy would not pay out, it would only pay out in the event of your death. Therefore, in these circumstances, critical illness cover is a good way to ensure that your loved ones would still be financially protected.
The conditions covered by Critical Illness Cover 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.
You can also view them on our Policy Features and Benefits Comparison page.
The stage in your life and the responsibilities you have, rather than your age, should be at the forefront of your mind when thinking about whether life insurance is right for you.
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