26 May 2010 Tell a Friend
1. You'll protect your family in the event of your death
If you're the main earner in your household it's your responsibility to ensure that if you were to die unexpectedly, your family would be taken care of. Funeral expenses alone can amount to thousands of pounds, and with no money coming in, your family would have to meet this cost as well as countless others - all at a very difficult time.
2. You'll guarantee an income for your dependents
A life insurance policy guarantees a lump sum payout on the event of your death, which means that you are providing an income for your partner and children. There are different types of life insurance policy, some of which will provide cover regardless of when you die and others where you must specify the time period over which you want cover. You can maximise the income your dependents receive by putting a life insurance policy 'in trust'. This means that the payout is made to your beneficiaries directly, not to your legal Estate, and therefore it is not liable for Inheritance Tax.
3. Your children will be able to complete their education
Whether or not your child is privately educated, there are substantial costs that you will incur over while they are at school. From uniforms to school trips, the costs mount up quickly, and if you were to die unexpectedly with no life insurance it's likely that there would be a struggle to maintain their education. Consider also the costs involved in sending your child to university if they choose to go into further education. These costs are only going to increase, and your life insurance policy could be the difference between getting a degree or having to go straight into work.
4. The house and other assets will be safe
If you're one of thousands of UK homeowners with a mortgage, you'll be aware of the risks involved in missing mortgage payments. In the short term, your credit rating takes a nosedive, making it harder to get accepted for further credit in the future. Being unable to meet your mortgage payments in the longer term however can lead to repossession. If you contribute part or all of the mortgage payments each month out of your income, you need to have life insurance to ensure that your family is still able to meet these payments if you were to die.
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