One of the main reasons people buy life insurance is to financially protect their family and/or loved ones should they pass away unexpectedly. If you have dependants, such as a spouse, children, or aging parents, life insurance can help replace your income and help ensure that your loved ones are taken care of after you're gone.

Here are some of the main reasons you may need life insurance cover:

Purchasing a home

Buying a new home is an exciting and significant milestone in life. It is also a time when financial responsibility increases. Life insurance is crucial for homeowners as it provides protection and peace of mind. It ensures that your family/loved ones are not burdened with the risk of losing their home after your death.

One way life insurance helps is by covering the outstanding mortgage repayments. If you were to pass away, the proceeds from a policy can be used to pay off the remaining balance on your mortgage. This prevents your family/loved ones from potentially losing their home.

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Getting married

Marriage is an exciting time, but brings a host of responsibilities. One of those being the need to protect your spouse financially in the event of your death.

One type of cover ideal for couples is joint life insurance. It's designed to provide cover for both parties should one of them pass away before the other.

Learn more about joint life insurance

Having a baby

Bringing a child into the world is an incredible and life-changing experience. As you anticipate the arrival of your little one, it's natural to think about all the things you need to prepare for their arrival - from baby cribs to strollers and everything in between.

Life insurance may not be the first thing on your mind when you're expecting a baby, but it's a vital financial tool that can provide peace of mind and financial security for your growing family.


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Planning for a funeral

Funeral planning shouldn’t be overlooked. While it may be a topic that many would rather avoid, taking the time to plan ahead can provide peace of mind for both you and your loved ones.

First and foremost, it's essential to have open and honest conversations with your family and loved ones about your wishes for your funeral. This includes discussing whether you would prefer a traditional burial or cremation, as well as any specific religious or cultural customs that should be observed.

Your life insurance payout could be used to help cover the cost associated with your funeral, so that your wishes are carried out.

Inheritance tax

Inheritance tax is a topic that often comes up in discussions surrounding estate planning and the passing on of wealth from one generation to the next. This tax is levied on the estate (the total value of property, money, and possessions) of the person who has passed away.

Inheritance tax is that it is not automatically applicable to every estate. No tax should occur if the value of your estate falls under the threshold.

If your estate does, however, exceed the threshold, then you may wish to set up a life insurance policy to help pay any potential tax bill after you pass away. 

One way to avoid your life insurance policy becoming subject to inheritance tax as well is to write your policy in trust. In this instance, the money from the policy would belong to the trust, and not your estate.

Learn more about writing your policy in trust

For your children

It's every parent or guardian's duty to ensure their child has the best start in life. While you may not be able to oversee every step of their journey into adulthood, life insurance can provide a financial safety net.

This is especially the case if you were to pass away before they reach their 18th birthday. The proceeds from your policy can help cover some of the costs associated with adulthood. For example, helping them buy their first home or car.

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Owning a business

As a business owner, your death could have serious financial implications. Not only would your family/partners be left to cope with the emotional impact of losing you, but they could also be faced with the daunting task of managing and running the business without you.

Life insurance can provide financial protection for both your family and business in this situation. The proceeds from the policy can help to cover any debts or ongoing costs of the business. This way, your business can remain intact even without your help.

Learn more about life insurance for the self employed and business insurance

Who doesn't need life insurance?

Not everyone needs life insurance. Depending on your individual circumstances, it may be unnecessary to purchase cover. This may apply to those who are/have the following:

  • Single and financially independent: If you are single and have no dependants, life insurance may not be a priority. Since there is no one relying on your income for financial support, the need for cover is reduced.

  • Adequate savings and investments: If you have already built a substantial amount of savings and investments that can cover your funeral expenses, outstanding debts, and provide for your family/loved ones in the event of your passing, life insurance may not be essential.

  • No outstanding debts or financial obligations: If you have no outstanding debts, such as mortgages or loans, and have no significant financial obligations to fulfill, life insurance may not be necessary. In such cases, your family/loved ones will not be burdened with any financial liabilities in the event of your death.

  • Sufficient employer-provided cover: Some employers offer life insurance cover as part of an employee benefits package. If your employer provides a sufficient amount of cover that meets your needs and you are satisfied with the terms, additional life insurance cover may not be required.

However, you may want to weigh up whether it is worth purchasing personal life insurance, even if you have enough cover through work as you likely won’t be able to keep the cover if you left the company


When should I buy life insurance?

The simplest way to know whether or not life insurance is right for you is to ask yourself whether anyone depends on your income. If yes, then life insurance may be a priority.

Furthermore, if you have financial obligations that would need to be taken care of in the event of your death, such as a mortgage, it can help with covering such costs.

If you're unsure about your needs, you can speak to our expert advisers. They can answer any questions you have about the process, as well as provide suggestions on different life insurance policies that may suit your needs.

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