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Do I need Life Insurance?

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Alex, Staff Writer

Friday, 4 June 2021

Life Insurance

Not everyone needs life insurance, but if you have financial dependents then it's likely you need it, as you'll want to provide financial protection to your loved ones after you die.

By not openly stating your wishes and putting plans in place, you could be leaving your family financially vulnerable if you pass away. Therefore, the best way to protect them against financial hardship is to take out life insurance. 

If you have been wondering whether life insurance is right or not for you, here is what you need to know. 

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What is Life Insurance?

Life insurance is a type of policy that provides financial protection for your loved ones after you die. It is also known as life cover or life assurance. The most common life insurance policy will pay out a lump sum to your loved ones if you die, but policies are entirely customisable depending on your needs.

Life insurance is designed to help your loved ones with everyday financial worries for when you are no longer around. These may include mortgage payments, childcare costs or household bills.

What are the benefits of Life Insurance? 

  • Help avoid financial difficulty for your family

  • Multiple insurance types to suit your needs

  • Money can benefit your family in various ways

  • Offers peace of mind

  • Easy to set up

  • Possible tax benefits

Do I need Life Insurance if I have a mortgage?

If you own a home and the mortgage is not yet paid off, you have to consider what would happen to your family if you die, and your income is no longer coming in anymore to cover the payments. It is for this reason that many mortgage providers insist you take out a life insurance policy, which is usually a fixed term life insurance policy.

Granted, homeowners insurance already spans everything from damage to your furniture, to all possible disasters that could happen within the building itself. But, it still doesn’t cover the payments needed to secure your property so that it doesn’t become repossessed, if you’re not there to pay the mortgage. 

The idea of life insurance for homeowners is that your family can’t be evicted while simultaneously grieving for the loss of a family member, which would add extreme distress in what is already a very difficult situation. 

It’s also so easy to assume that when your life stops, so does everyone else's. When in reality, your family will need to keep going and the only way they can do that is if the finances are taken care of.

Life Insurance for seniors

Life Insurance

Life insurance is most commonly associated with seniors and is also known as over 50s life insurance. 

The most common type of life insurance for seniors is whole life insurance, which will pay a lump sum to your loved ones at the end of your life, regardless of what age you die. Other life insurance policies are fixed-term ones and cover a specific period only (usually while the mortgage is being paid off). The aim with whole life insurance is typically not mortgage-related, but rather to ensure your loved ones are well taken care of financially after you die. 

While you should always seek independent financial advice, you may find paying into life insurance will create tax benefits for your family when it comes to their inheritance. This is one of the biggest benefits of whole term life insurance, alongside the fact the payment is guaranteed. 

Do I need Life Insurance if I have no dependents? 

Technically, no you don’t need life insurance if you don’t have any dependents. The catch of course would be what age you are, especially if you are yet to start a family. That’s because if you take out whole life insurance in your 20s or 30s, the cost of premiums will be fixed at a considerably lower rate, versus if you start in your 40s or above. 

How much Life Insurance do I need?

Only you can answer that question, as each person is going to have a completely different motivation as to why they want to take out a life insurance policy. 

For example, a parent in their 30s may want to pay off their mortgage, put money aside for their child’s education and future wedding etc. However, a grandparent in their 60s may just want to concentrate on paying off their funeral and leaving a lump sum for their grandchildren. 

Things to consider are:

  • The cost of your remaining mortgage

  • Immediate financial support of children

  • Long term financial support of children/grandchildren

  • Cost of your funeral

  • Any debts that are yet to be paid off

  • Any additional legal fees

  • Tax benefits of life insurance for inheritance purposes

If you’re unsure of the exact figure you need, most insurers will give you a suggested amount based on the information you tell them relating to the above criteria. 

Which other types of insurance should you get?

Life Insurance

Life insurance is vital for anyone who wants to financially protect their loved ones when they are no longer there, but there are many other ways that you can protect your home, family, or assets with insurance. Other types of insurance to consider include:

Life Insurance quotes

Life Insurance

If you are interested in getting life insurance, then the first step is to collect some life insurance quotes. To do so, you’ll need to tell insurers some information about yourself, and the type of cover you’d like to put in place. 

No need to move a muscle to get started, as you can find Life Insurance Providers right here on Bark. Browse the best life insurance deals for you, and get that all-important peace of mind that your family will be taken care of when they need it the most. 

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