When should I take out life insurance?

From your 20s to your 60s and beyond, we’ve put together a quick guide for what to consider once you meet these milestones.

Generally speaking, there’s usually no better time than now to arrange life insurance cover, however it’s important to understand the range of options and products available to you, whatever stage of life you’re at.

In your 20s & 30s

When it comes to buying life insurance, the younger you are, the less expensive it will generally be. 

If you have other people who depend on your income and you don’t already have life insurance in place, it’s important that you consider taking out a policy as soon as you can. 

However, younger people tend to put off buying life insurance due to other financial concerns, such as car finance, student loan repayments and paying a mortgage. While paying bills is critical, missing out on buying life insurance policy at a young age can be costly, much like delaying saving for your retirement.

At Cavendish Online, we have a wide range of policies from dozens of providers that specialise in low cost life insurance for all ages.

In your 60s & beyond

We all know life insurance is crucial if you have family members who are financially dependent on you, however as you get older, your loved ones may have become more independent and no longer reliant on your income. You may have now cleared your mortgage and your children may have since left the home to start their own families. 

Now may be the best time to consider a ‘whole-of-life’ policy. With a whole-of-life insurance policy, the clue is in the name. As we all (unfortunately) die one day, this policy is ongoing so it will pay out a lump sum whenever that day comes.

TIP: Whole-of-life insurance is also known as life assurance by many insurers.

One of the main benefits of whole-of-life insurance is that it can help your family deal with any bills associated with inheritance tax. Currently, if an estate is valued at more than £325,000, inheritance tax will be charged at 40% on the value of the estate above that threshold[1].

However, the tax will need to be paid before your loved ones are given access to your estate. This can put your family in a difficult position - they need to pay a tax bill which may run into (tens of) thousands of pounds, but they wouldn’t be able to use the money in your estate to do so. 

As a result, many families are forced to take out loans just to cover this bill, which at an already upsetting time, may be particularly stressful. A whole-of-life insurance policy could help avoid this issue. The payout would provide the funds required to clear the inheritance tax bill without your loved ones needing to take out a loan or go into their own savings to cover it. This though, is reliant on the policy being written in trust.

Whole-of-life cover may also appeal if you are determined to leave some form of inheritance to your loved ones, or if you want to help with your funeral costs.

With a wide range of options, speak to us at Cavendish today to choose a life insurance policy that's right for you.

[1] 2020/2021 Tax Year. Source: https://www.gov.uk/inheritance-tax