The basis for taking out life insurance is pretty simple. Life insurance covers against something horrible or unexpected happening to you that will have a detrimental affect on any dependents you may have left behind.
For example, if you were to die prematurely, then having life insurance will help provide your partner/spouse with financial support to keep paying the mortgage and other household bills.
In a nutshell, life insurance is particularly important if you have any dependents that are reliant on you and your money.
If you have no dependents, then taking out life insurance serves little or no purpose as there’ll be nowhere for your insurance payment to go after your untimely death.
Below we’ve provided the people that life insurance would be suitable for:
- Those with a partner or spouse – If he or she is dependent on your income to pay the bills now and in the future.
- Those with children – This applies to single parents, and both married and co-habiting couples. If you have children who are reliant on your income to cover children’s tuition fees, or even your daughters wedding then cover should be considered.
- Those with a mortgage or large debt – Loved ones should be sufficiently covered to pay off all your outstanding debts.
For all the people mentioned above, life insurance should be an integral part of your financial planning.
As we all know the cost of living is expensive, and is increasing year after year. So if the income from the main breadwinner was to suddenly disappear who is going to cover the mortgage repayments, living expenses, loans and education fees?
Pretty scary thought isn’t it?
To alleviate any of this worry, then life insurance is a perfect option.
But where do you start? Well as with all types of insurance, it’s important you shop around. There’s lot’s of good deals out there. One of the best and most efficient ways to find them is to use an online comparison site.
When you do find a life insurance provider that can deliver cover that best suits your needs and at the right price, then purchasing their policy should not mean it’s the end of the matter.
Taking out life insurance with a certain provider, does not mean you have to stay with them for the life of the policy.
The life insurance market changes like any other market. This could mean that your current provider will be unable to meet your current needs. If so you can switch providers as and when you want, usually without any penalties (* please check your terms and conditions however to make 100% sure).
Therefore it’s always worth keeping a look out for what deals other providers are offering.
This is particularly relevant, if you’re still in good health, but your personal life circumstances have changed i.e. you’ve got married, you’ve had children, taken on a mortgage, or you’ve changed jobs. Such events will require you to rethink your life insurance provisions.
It also important to note that as and when the financial requirements of your dependents decrease, so can the cost of your insurance cover, if you select ‘decreasing term insurance. For example, if your mortgage reduces or you’ve actually paid it off completely, then there’s less outgoings/debts that need to be covered, therefore your insurance premiums should reduce accordingly.
Finally, you should consider how long you need to be covered for. If your children are financially independent, your mortgage is paid off, and you have no other substantial loans or debts that might impact the life of your surviving spouse or partner, then paying for life insurance cover is probably unnecessary.