Why do I need life insurance?

Why do I need life insurance?

13 Apr 2020

Hopefully you’re reading this because you are considering taking out life insurance. If so, hurrah - you’re in the right place! We’re experts on the subject here at LifeSearch and we’re passionate about making sure people are protecting the lives they love.

Not everyone needs life insurance, but generally speaking if you have financial responsibilities and any dependents, then you should. But first, let’s start with the basics and explain what life insurance is.

What is life insurance?

Life insurance is designed to pay a lump sum when you pass away to look after your family financially when you’re no longer around to provide for them. When you take out a life insurance policy, you’re buying peace of mind. You’re paying to protect your loved ones and to make sure that they can go on living some sort of reality even when you’ve passed away. Plus, it’s one less thing for them to worry about during a difficult time. 

When you take out a life insurance policy, you need to think about whether you opt for a decreasing term policy or a level term policy. Decreasing term policies are designed to cover a debt that decreases over time, such as your mortgage. Because the potential payout amount decreases with time, the monthly premiums are typically lower for this kind of a policy. With a level term policy, the payout amount stays the same throughout the policy. Whether the claim happened a year into the policy, or ten years into the policy, your dependents would still be paid the same amount of money. This is a more attractive, but certainly a more expensive option. 

Not all life insurance policies last for a lifetime and it depends which you choose when you take out your policy; whole life or term life. Whole life will last for the whole of your life, so you’re guaranteed payout. As you can imagine, the premiums for this are a little more expensive. A term life policy lasts for a certain amount of time, so perhaps until your mortgage would be paid off or until your children would be financially dependent.

Life insurance with children

Which brings us onto our next point. If you have children, you should seriously consider having life insurance. Children need a lot of care and attention, so a regular steady income is pretty vital. If something was to happen to you or your partner, a life insurance payout could make sure that the costs of running a family home are kept on top of.

Children are expensive - something we’re sure any parent is well aware of. There’s the cost of clothes, nappies, food, school costs such as uniforms and books, and of course the big one - childcare costs. Perhaps whilst one parent is out earning money, the other is at home with the children or perhaps working reduced hours. If something was to happen and there was only one parent around, you might have to start paying for childcare (or for more childcare than you already do), which can be super expensive. It can make it all the more difficult to keep up with necessary everyday spending. 

Secondly, paying the mortgage or the rent will keep a roof over your families head which is vital. The last thing a family are going to want to deal with alongside a death is potentially losing their home because they can’t cover the rent or mortgage. 

Life insurance with a mortgage

With mortgages in mind, if you have a big financial commitment such as this, then life insurance becomes important. In fact, when you take out a mortgage is usually the point in your life when people will begin asking and reminding you to take out life insurance.

With a mortgage, if you don’t meet the repayments month by month, your property will get repossessed and you won’t have anywhere to live. You don’t need life insurance if you’re a single person with no partner or children, even with a mortgage. If you pass away, the house will simply be sold on to pay off the mortgage. 

However if you’re leaving a partner behind to cover the mortgage repayments alone - with or without children to add into the mix - it’s a lot of extra added stress in a difficult time. Being protected with life insurance in this instance means that your partner will receive a payout to either pay off the mortgage or to contribute to the repayments so that they can continue living in your home - somewhere that they are comfortable and familiar with - whilst they make sense of how things have changed.

Life insurance for over 50’s

Although we’re firm believers that life insurance is important for adults of every age, we know that a lot of people only start thinking about life insurance when they get a little older. Perhaps they’re feeling less confident about their health and want to take the necessary precautions to ensure that themselves and their families are protected. A life insurance payout can help to pay bills and debts, contribute towards funeral costs or be something to leave behind for the grandchildren to give them a headstart in life.

The only problem with taking out life insurance as an older person is that the premiums will inevitably be higher - that’s why we always recommend taking it out whilst you’re young, fit and healthy. Even though you may encounter higher premiums as an over 50’s applicant, there are other life insurance products out there that could serve as a better alternative, such as over 50’s life cover

Over 50’s life cover is more tailored to the needs of the older age bracket. It combats the obstacles that this market might face and it makes cover more affordable. You’re guaranteed to be accepted for this kind of a policy, so that’s a weight off your mind for starters. There’s no medical questions to answer and it usually caters for those aged 50 to 80, but also up to 85 in some cases. 

If you’re out there in the world working, living alone, starting a family or looking back on the last 50+ years of life, chances are that there’s a very good reason for you to take out life insurance. Remember; we’re not invincible. No one likes to think about passing away, of course, but the truth is we have to prepare for it as nothing is guaranteed. If you want to protect the people you love, taking out life insurance is the ultimate superhero move.

When you’re ready to begin the process, our expert advisers will be here to find you the perfect policy! So give us a call on 0800 316 7253 and let’s protect the life you love.

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LifeSearch Limited is an Appointed Representative of LifeSearch Partners Limited, who are authorised and regulated by the Financial Conduct Authority. Calls may be monitored/recorded.