Why Do You Need Life Insurance​?

Have you ever thought about what might happen to your loved ones if you were no longer around? It's the last thing you want to think about, but sadly, anything is a possibility in life. While they may have savings or other financial resources to rely on, it may not be enough to cover all the expenses.

In this guide, we'll explore some of the main reasons you may need life insurance cover, as well as the benefits it can offer.

Why life insurance?

As long as you have people who depend on you financially, life insurance may be a good idea.

While there's no legal requirement to have life cover, you may need it in certain situations, such as if:

You have dependants who rely on your income

If you have dependants such as a spouse/partner, children, elderly parents or siblings to care for, they may be left vulnerable without your financial support.

While life insurance can't replace the emotional loss, it can help to cover the income lost by your death. This could mean helping your dependents cover their living costs such as their education, mortgage payments, debts, and more.

You have existing debts

Life insurance can be a smart way to financially protect outstanding debts, such as a mortgage, personal loans, or credit card balances. Without insurance, your family might be burdened with these financial obligations after your passing.

There are specific types of life insurance that can cover debts, such as a repayment mortgage, known as decreasing term life insurance. It works by gradually reducing the cover amount over time, mirroring the balance of your mortgage. The aim is to pay off your mortgage if you pass away before it's fully repaid.

You’re planning for future expenses

Life insurance can also play a vital role in planning for future expenses, such as children's education or retirement savings for your spouse. With rising education costs, the policy could help make sure your children’s educational dreams are not hindered by unexpected financial shortages.

Likewise, your spouse might need additional support to help with their retirement planning. Without cover in place, they may be forced to dip into their savings to cover your income or to pay towards end-of-life costs such as a funeral

Permanent life policies, such as whole life insurance, are often a great fit when it comes to planning for the future. With no expiry date, you don't have to worry about outliving your cover.

You want to cover funeral expenses

Funeral costs can be surprisingly high, and without any planning, it could become a significant burden for your family. According to research, even a simple funeral can cost around £4,285[1].

There's so much to take into account, such as transportation, flowers, burial plots, and ceremony fees. When added up, these can all strain your family’s finances during an already difficult time.

Your life insurance policy could help to cover these expenses, in which case your family won't have to worry about these costs or downsizing your wishes.

Even if you have a funeral plan, it still may be worth taking out life insurance cover alongside it. For more information, please see: Life Insurance vs Funeral Plan - What's the Difference?

You want to leave a financial legacy

Even if your family has the means to get by in the event of your death, you may still want to leave an inheritance. This may be to help give your children or grandchildren a head start in life, such as funding for their first home or supporting their future education. You can also choose to leave your policy to a worthy cause, such as a charity.

If you have a high-value estate, your beneficiaries might be subject to inheritance tax, which could significantly reduce the amount they actually receive. In this case, you could opt to write your policy in trust.

You own a business

As a business owner, your death could have a profound impact on the day-to-day running of the business. Without adequate planning, it might leave your business partners or employees in a precarious situation.

If you're a key part of the business, your absence could lead to financial hardship or loss of confidence amongst clients and investors. Policies like key person insurance can help stabilise the business during challenging times.

If you're a family-run business, it may make sense to have joint life insurance, which can cover two people under one policy. If you or your business partner were to pass away, the surviving policyholder could use the payout to cover debts and expenses.

You’ve had a major life change

Today, life insurance may seem unnecessary, but tomorrow it could make all the difference to your loved ones. This especially applies to key moments in life such as:

• Getting married
   

• Becoming a parent
   

• Buying a home
   

• Taking on joint debts
   

• Supporting an ageing parent
   

• Starting a business
   

• Having a health scare

In any of these cases, life insurance is more than just a policy — it’s a safety net for the people who matter most. It helps to provide peace of mind, knowing your loved ones could be financially secure, even as your responsibilities in life increase.

How can I get life insurance?

In today's fast-paced world, getting cheap life insurance cover is easier than ever. Thanks to companies like Cavendish Online, you can find affordable quotes in a matter of minutes. With the help of our expert advisers, you'll have all the advice and guidance you need to choose the best policy for your needs.

When you apply for a quote online, we'll ask you some basic questions such as your age and health as well as the amount of cover you are looking to buy. We'll then show you rates from leading life insurance providers and help you compare the options available.

But if you're not sure where to start, we recommend speaking to an adviser who can provide personalised guidance tailored to your situation. You can call our team on:

01392 436 193

(Monday to Thursday 9am – 5.30pm, Friday 9am – 5pm)

[1]https://www.sunlife.co.uk/over-50-life-insurance/funeral-costs/