The 10 reasons why you need life insurance now
Life insurance, or as we like to call it ‘protection insurance’, is there to protect you and your family financially when horrible things like death or illness happen. Understandably, these times can be very emotionally stressful, but often people don’t think about the financial stress that can also strike at a time like this. Protection insurance helps to take away the money worries so that you can focus on the more important things. In this guide, we list the top 10 reasons why you should be thinking about protection insurance.
- You own a home and have a mortgage Buying a new home or stepping onto the property ladder is a really exciting time, but can also be stressful when it comes to money. Your mortgage is possibly the largest debt you’ll ever face, and you will probably need your income, and possibly a partner’s income, to make the repayments. But what if you fell seriously ill and couldn’t work? Or even worse, you passed away. Could the mortgage still be covered? That’s where life insurance or critical illness insurance could come in handy. These products pay you a lump sum amount of money to pay off your remaining mortgage if you were ever to become seriously ill or die. Paying off the mortgage means that you and your family won’t need to worry about keeping up with repayments. Decreasing term life insurance is a product designed specifically for mortgages.
- You rent a property Protection insurance isn’t only for those people who own properties, there are products that work equally well for renters, like income protection insurance, which replaces your income if you fall ill or have an accident and become unable to work. It means that you don’t need to worry about covering your regular bills, including your rent, and can focus on getting treatment and making a full recovery. Income protection insurance is one of those products that not many people know about, but most people find incredibly handy to have.
- You have children Often when people have children, they become much more aware of the future and what they want for their family. They buy life insurance to provide that peace of mind that their children will get everything they need, even when they’re not around. You might want to replace lost income, or perhaps you want to pay for your child’s education. You may even just want to leave a financial gift for your loved ones when you pass away. Life insurance means that your family can carry on doing all the things they have always done.
- You want to pay for your funeral As the saying goes, there are only two certainties in life: Death and taxes, and while we can’t do too much about your taxes, we can offer you an insurance product that will help with the cost of your funeral, when that time comes. Funerals are becoming increasingly expensive, with the cost of dying reaching over £9,000 in 2018 , and over 50s insurance is a protection insurance product that people often buy to help with this. When you die, your policy will pay out a lump sum of money which can be used to cover the costs of your funeral, removing any financial strain from the family at an already difficult time.
- You’re worried about inheritance tax Your loved ones may need to pay tax on their inheritance when you die, this tax is called Inheritance Tax (IHT), and is currently set at 40% of the value of your assets over £325,000. So, if the sum of all of your assets is greater than £325,000, including any savings, property and investments, your family could face an IHT bill when you die. This tax bill can be particularly unsettling at an already emotional and stressful time. Whole of life insurance can be used to cover this IHT bill, paying out a lump sum amount of money to match the amount of tax that your family would have to pay.
- You or your family suffer with health conditions Facing illness personally, or seeing a loved one suffer with illness, is upsetting, and often an unexpected reality check. Many people who have faced, or are facing, things like cancer, diabetes or mental health struggles, worry about the future and their finances.
- You’re self-employed People who are self-employed have arguably a greater need for protection insurance than those in employed roles, simply because they don’t receive any sick pay from an employer. If you’re one of the 4.8 million self-employed people in the UK , chances are that if you fall ill and can’t work, you may lose some income. This can understandably cause financial worries and a lot of pressure. Income protection insurance is the ideal protection insurance product for self-employed individuals because it replaces your income if you fall ill and are unable to work.
- You don’t have much in terms of savings Saving for a rainy day can be hard, in fact, did you know that 15% of people in the UK have no savings at all, and one in three has less than £1,500 in the bank . If you fell ill and were unable to work, how long would your savings last? And even more importantly, would you want to use your savings pot in this situation? Protection insurance can step in here to provide cover for you and the family so that you can keep your savings for the fun things in life.
- You’re young but still have financial needs Many young people don’t think about protection insurance, perhaps they don’t have a family yet, or aren’t a homeowner. But protection insurance, in particular, income protection insurance, is a useful product for nearly everyone. In fact, buying income protection insurance now, while you are young, is a very good idea. Why? Because your cover will be significantly cheaper. Insurers base the premiums they charge on your chances of falling ill and claiming on your policy, so the less likely you are to make a claim, the cheaper your cover will be. This is certainly true for young people who are typically in better health than the older generations.
- You lead a healthy lifestyle The healthier you are, the less likely you are to make a protection insurance claim, and the cheaper your cover will be. So, if you don’t smoke, are active, eat well and maintain a good weight, you will find that your protection insurance is very affordable. Some insurers even incentivise and offer rewards for living a healthy lifestyle. Call us on 0800 316 7253 to chat with one of our friendly advisers who will find the right policy for you at the best price.
Many look to life insurance for some much-needed peace of mind but worry that they can’t get covered because of their health challenges. Fortunately, however, many people who have faced illness in the past can get protected, and our specialist financial advisers at LifeSearch are here to help, why not request a callback today?
I want to know more…We’re here to help, so call us on 0800 316 7253 or request a callback from one of our expert advisers who will happily answer any questions you have. We look forward to chatting with you soon.
 SunLife (2018), Cost of Dying Report, sunlife.co.uk/costofdying2018
Suicide and life insurance
16 Oct 2020
How much tax is deducted from life insurance?
29 Sep 2020
Whilst many life insurance policies pay out a tax-free lump sum, not every payout will be able to avoid taxation.