Can I Afford Not To Have Life Insurance?
7 Aug 2019
Whether or not you can afford not to have life insurance depends completely on your individual circumstances. Generally speaking, people will fall into one of two categories - someone with dependents, and someone without dependents. If you fall into the former, then you should have life insurance.
What is life insurance?So, you know you probably should be thinking about life insurance but you’re not sure what it is exactly. Life insurance is designed to pay a lump sum - or regular payments with some products - when you pass away to look after your family financially when you’re no longer there to provide for them.
People often say that life insurance ‘buys peace of mind’ and that’s pretty much it in a nutshell. You’re paying to protect your loved ones to ensure that they can go on living the life they love, even after you’re gone - plus, it’s one less thing for them to worry about during a difficult time.
As for premiums, life insurance can be very good value with a policy to fit into most people’s budgets. We asked people how much they would be willing to spend on life and health insurance each month and the average answer was £50, which is actually more than enough to cover the essentials. The price you pay for a policy will depend on your individual circumstances such as your age, health, lifestyle, whether you smoke, the length of your policy and the amount of money you want to cover. The younger you are and the less likely you are to pass from a medical condition, the cheaper your policy is likely to be.
Life insurance usually only pays out in the event of death, but there are other insurance products available that will cover if you’re still around but unable to provide due to injury or serious illness, such as critical illness cover and income protection.
When do I need life insurance?If you have children that rely on you financially, then you should have life insurance. Children are expensive and raising them comfortably on one salary can be difficult. You don’t want to leave your partner in a difficult situation when you’re no longer around. A life insurance pay out will leave you reassured in the knowledge that your kids can go on living the same lifestyle as they always have, with all the necessities such as school uniforms and food on the table, and the things that enrich their lives, such as after-school activities and holidays.
Even if you don’t have children, life insurance could still be pretty vital. If you have a partner who relies on your income - for instance to cover part of the mortgage - they will be your dependent. The same goes for anyone else that depends on you, such as a parent or an elderly relative. How would they cope financially if you were no longer around?
When can I afford to not have life insurance?
A single person without children can afford not to have life insurance as their responsibilities are pretty minimal. No one else relies on their income and there wouldn’t be any big financial implications when they pass away.
Although the general rule of thumb is that if you have children then you should have life insurance, it’s not always a necessity. Your partner might earn enough for the family to live on, even without your income in the picture. Or perhaps you’re on a low income and eligible for state benefits which can cover your needs.
It’s worth checking your employee package, as you might have ‘death in service’ benefits through your job which could mean that additional life insurance isn’t worth it. You’ll need to work out whether this kind of cover is enough to meet your needs and remember - if you stop working for that employer then you won’t be covered under their policy anymore.
The long and short of life insurance is that if anyone in your life relies on you financially, then it’s definitely worth having life insurance. Still unsure? Get fee-free friendly advice from the LifeSearch team, available without obligation today on 0800 316 7253.
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