One of the most common questions people ask us is: “do I need life insurance?”
It may not seem like a priority compared to some of the other monthly direct debits you pay. And, with many households maintaining a tight budget, it can often seem like an unnecessary expense.
However, while many people think nothing of insuring their car, their phone, or even their pet, a 2020 survey of UK employees for Canada Life Group Insurance revealed that two in five (39%) UK employees do not have any form of life protection.
Considering that life insurance costs as little as a few pounds every month, it’s something that many millions of people should consider. Read on to find out why.
Do I need life insurance?
Life insurance gives you the peace of mind that your loved ones will be financially supported when you’re not around anymore. It provides a lump sum to your dependents on your death, enabling them to pay off your mortgage, pay bills, replace your income, or simply pay for your funeral costs.
If you’re wondering whether you need life insurance, ask yourself this simple question:
“Would your surviving partner, family, and dependents be negatively affected financially if you were to die?”
If the answer is ‘yes’, then it’s time to think about putting some life insurance in place. If you don’t, your family and dependents:
- Might not be able to afford to remain in your home if you were to die
- May not have enough income to maintain their lifestyle
- Could struggle to pay bills, such as rent or utilities
- May not be able to afford to pay for your funeral
- Might not be able to fulfil the ambitions you had for them – for example, they may not be able to go to university or buy their own home.
Like any insurance, the best-case scenario is that you don’t have to make a claim because nothing has happened to you. However, in 2018 there were 1,687 deaths on average in the UK every single day, and so it’s important that you protect yourself and your family.
Do I need life insurance if I have children?
When you become a parent, one of your main responsibilities is to ensure your children are financially supported. If you were no longer around, this shouldn’t change.
You probably have dreams and ambitions for your children and want to ensure that they get the very best life that you can provide. So, what would happen if you were to pass away? Could they still live in your family home? Will the other parent be able to maintain their lifestyle? Would they still be able to go to university, or buy a home of their own?
If you have children, it’s vital that you consider what would happen if you were to die. Putting life insurance in place means that a lump sum would be available to financially support your children – and this could even be placed in trust so you can make sure your wishes are carried out.
In return for monthly premiums to an insurer, you benefit from the reassurance that money will be available for your children when you’re no longer around.
Do I need life insurance if I have a mortgage?
Your mortgage is likely to be the biggest financial commitment you make in your life. So, it makes sense to ensure that your spouse, partner, or family could continue to pay it if you were to pass away.
If you’re buying a home with a spouse or partner, it’s likely that your mortgage repayments will depend on two salaries. If you or your partner were to die before you have repaid your mortgage, would you be able to keep up the regular mortgage repayments on just one salary?
Life insurance can help ensure your spouse and family can remain in your home by paying out a cash lump sum in the event of your death. This can be used to repay part or all of your outstanding mortgage (this is usually what ‘mortgage life insurance’ means).
Your family may then be able to continue living in your family home without worrying about the mortgage.
Do I need life insurance if I have a spouse or partner?
If you are part of a couple, it’s likely that your finances may work on a ‘joint’ basis. You may have joint bank accounts, loans, or a joint mortgage. Or perhaps you just share household expenses?
If you do manage your money jointly, it’s worth thinking about how your spouse or partner would cope financially if something happened to you.
For example, if you are the main wage earner, would your spouse or partner be able to keep paying the mortgage, rent, or bills if your salary was no longer coming in?
And even if you are not the main wage earner, could your partner manage all the household expenses on just their income? For example, if you have children they may incur additional expenses such as childcare.
If you do have a spouse or partner, and you are financially co-dependent, putting life insurance in place gives you the peace of mind that financial support will be available should the worst happen.
Do I need life insurance if I already get cover through my employer?
Many employers offer a package of benefits to their staff. As well as a workplace pension, many firms offer ‘Death in Service’ benefit. This is a lump sum – typically three or four times your annual salary – that is paid to your dependents if you die while you are employed by the business.
In this case, it’s possible that you may not need any additional life insurance.
However, it may be that the amount paid out through your ‘Death in Service’ would not be sufficient for your needs. It may not be enough to repay your mortgage, for example, and so you may still need to take out additional life insurance protection.
Do I need life insurance if I have no dependents?
If you are single, you have no dependents, and you have no debts to speak of, then life insurance may not be your top priority.
Even if you have a mortgage and own a home, your family may be able to sell the property and repay any mortgage if you were to die.
In this situation, it may be the case that income protection is more important. According to insurer LV=, a 30-year old male non-smoker planning to retire at 65, has only a 4% risk of death compared with a 29% chance of being off work for two months or longer.
Income protection, which is designed to replace lost earnings if you're off work long-term through illness or injury, may be a better option.
I'm Insured is an independent broker with access to dozens of the UK’s leading insurers. We’re here to help you to find you the best deal possible.
To save time, you just fill in one simple form, and then we’ll research the market to find the right cover for you. We’ll compare life insurance prices from some of the country’s leading providers, enabling you benefit from cheap life insurance.
We even take less than the standard level of commission from the insurers we work with, so you save money on the cost of life insurance.
1 in 10 considering stopping or reducing their protection premiums as the cost of living bites
June 29, 2022
If you think insurers don’t pay out, you’re wrong. Here are the statistics to prove it
June 9, 2022
5 costly reasons you might pay more for your protection (and how you can save money)
January 28, 2022
5 strong reasons you might need more life insurance
January 11, 2022
10 financial new year resolutions you should make for 2022
December 16, 2021
10 practical ways to manage your money successfully this Christmas
December 1, 2021