5 reasons why you need life insurance cover

It’s common knowledge that life can be unpredictable, so it’s always better to be prepared for any eventuality in your life – including death. Life insurance cover is a must-have for providing your family financial security should the worst happen. Here are five main reasons why you should consider buying a life insurance policy…

1) Gives your loved ones peace of mind

If you don’t already have life insurance cover, you risk your family being left with a huge financial burden when you die. It can create a stressful situation out of what is already a difficult time. 

When you die, your policy pays out a lump sum to your family, meaning they don’t have to rely on savings to cover future costs. So, if you’re looking to provide peace of mind for your loved ones, look no further than life insurance.

2) Provides permanent coverage

There are two main types of life insurance cover:

  • Whole life insurance – also known to insurers as life assurance
  • Term life insurance – usually refers to a standard life insurance policy

Whole life insurance covers you for the rest of your life, therefore provides you and your family with permanent cover. When you die, your insurer pays out a cash lump sum, which can be used to help your family cover future costs. Although whole life policies can be expensive, they will pay out regardless of when you die – so long as you keep paying your monthly premiums.

Term life insurance, on the other hand, only covers you for a set period of time, for example 20 years. Unlike whole life cover, you are only protected for a limited amount of time. Furthermore, the policy only pays out if you die with the policy term. However, a term life policy is often cheaper than whole life, making them ideal as a cost effective option for cover.

The question you should ask yourself is, would you rather have an expensive policy that covers you indefinitely, or a cheaper policy that only covers you for a limited period?

There is also joint life insurance, this provides cover for two people in a single policy. An ideal choice for couples, a joint policy can often work out cheaper for you and your partner, instead of buying separate policies.

3) Can help your family with future costs

Your death can have a huge impact on your family’s finances, impacting them in both the present and future. When you die, your insurer pays out a lump sum, which can be used to help your loved ones with outgoings such as:

  • Funeral costs
  • Mortgage repayments
  • Private healthcare
  • Your children’s education
  • Household bills
  • Unpaid debts/loans

If you’re unsure on how much cover you should take out, it’s best to assess your current monthly earnings. This can be an indication of the financial support your family will lose in the event of your death.

4) Protects your mortgage

If you die before your mortgage has been paid off, your debt doesn’t just disappear. Instead, your mortgage provider will expect your family to continue making payments. If your loved ones are unable to make these payments, they may have to sell the home to cover the cost.

There are 3 main types of life insurance cover that can be used to cover your home’s mortgage:

  • Level term life insurance – Issues a fixed lump sum to your family when you die. As this is a type of term life policy, they will only receive this amount if you die within the policy term. The monthly payment for your premiums is also fixed during the term.
  • Decreasing term life insurance – Commonly used to cover a mortgage and other large payments, your family may struggle to cover by themselves. As you make repayments on your mortgage, the pay out value of your policy decreases over time. When you die, they receive the remaining amount of the death benefit.
  • Whole life insurance – As already mentioned, whole life policies cover you for the rest of your life. During this time, both the pay out value of your policy and monthly premium costs are fixed. When you die, a lump sum is paid out to your family, which they can use to pay off the remaining balance on your home’s mortgage.

5) Leaves a legacy for your children

One part of being a parent is giving your children a helping hand for the future ahead. A life insurance policy can allow you to leave something behind for your children after you’ve passed away. When you die, your family receives a lump sum. This pays towards your children’s education expenses, travel plans, weddings, first home etc.

How much is life insurance cover?

Before you can purchase life insurance cover, you’ll need to apply for a quote. This can be done online or in person. During the application process, your insurer will ask some questions regarding your health and lifestyle.

There are several factors that can increase the cost of your monthly premiums, such as:

  • Your age
  • Health
  • Occupation
  • The type of policy you want to buy
  • How long you wish to be covered

If you’re looking to save money on life insurance, it’s best to apply for cover when you are young, and premiums typically lower. This is because you are less of a risk to insure when you are younger and healthier. If you’re ready to apply for life insurance cover, head online today to give your family the protection they deserve.

About Charles Knox 1393 Articles
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