Life insurance is designed to help protect your loved ones’ financial future if the worst should happen to you. But how do you decide when is the right time to take out a life insurance policy? We take a look at some of life’s moments that can trigger a need for it.
1. “I’ve just bought a house”
With a new house usually comes a new mortgage. Could your family manage mortgage repayments and maintenance costs without you? Many mortgage providers require you to take out life insurance so that if you died during the mortgage term the mortgage would be paid off.
2. “I’m married now and worried about my partner”
Sharing your life with someone means thinking about their future and what happens if you’re no longer around. Many of us depend on two incomes to manage household costs. Life insurance can help the surviving spouse manage financial burdens such as funeral costs, and outstanding debts. Even if you have life insurance through work, you might need extra cover for your partner.
3. “We’ve just had a baby”
Having children is one of the main triggers to take out life insurance, as this is when you realise that others depend on you. If you were to die, the financial burden on your partner increases. Life insurance can help provide for your spouse and children when you’re gone. If you’re considering taking out a policy, it’s important to ensure that there is enough cover for your whole family.
4. “I’d like to send my children to university”
We all want the best for our children. This includes giving them a good education and having the resources for your kids to finish their education even if you’re gone. Taking out a life insurance policy can help pay towards higher education for your children if you were no longer around.
5. “I’ve just paid for a loved ones’ funeral”
Losing a loved one is an emotionally distressing time for everyone involved. Sadly, the cost of funerals has risen over the years with the average funeral cost now at £3,456* based on our research. Choosing to take out life insurance or a funeral plan will ensure that your loved ones are left with some financial help if the worst were to happen to you.
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6. “I worry about my parents in their old age”
As our parents age, it’s natural to worry about them as well, particularly if they’re retired and have no income or little savings. If your parents were to outlive you, could they cope financially?
7. “My friend has been diagnosed with cancer”
More than 1 in 3 people in the UK will develop some form of cancer in their lifetime, according to Cancer Research UK. The good news is that more people are surviving critical illnesses – cancer survival rates in the UK have doubled in the last 40 years. Critical illness insurance provides a cash sum if you’re diagnosed with one of a series of serious medical conditions. It can also pay out if you become permanently disabled as a result of illness or injury. The money can be spent however you wish, whether to cover medical treatment or household bills.
8. “I have a family history of a serious illness”
You may still be able to take out life insurance if you have pre-existing medical conditions or a family history of illness. However, premiums are likely to be more expensive and, in some cases, you won’t receive cover for any existing illnesses. When choosing a critical illness policy it’s important to check exactly what illnesses are and are not covered.
9. “My partner and I have recently divorced”
Even if you’re divorced, the commitments you incurred as a married couple still exist, such as the mortgage, car and credit card bills. Many divorced couples take out a life insurance policy on the person responsible for paying child support so that the income is still available if anything happens to them. For couples with tight budgets, term life insurance can be a good choice because it’s more affordable and provides protection for a specific duration. This means for example you can buy a policy that lasts until your children become independent.
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10. “I’ve become a grandparent”
When a grandchild comes along, it’s natural for new grandparents to think about the kind of legacy they want to leave behind. Many people take out over 50 life insurance (also called whole of life insurance) so that when they are no longer around, the money paid out to their family makes for a meaningful gift.