5 Reasons to Get Life Insurance

27-May-2010

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.

5. Your debts will not pass to your family members

Think of all the money that you owe on credit cards, hire purchase, car loans and the many other financial obligations that build up over a lifetime.  If you were to die with no life insurance, you are effectively passing on your debts to your partner and children, but not leaving them with the means with which to pay them.  Debt collection agencies can employ quite aggressive tactics to recover debts, and there is the danger of legal action and repossession if debts remain unpaid over a long period of time. The lump sum payout from a life insurance policy would enable your dependents to pay off your outstanding debts.  You therefore have the peace of mind of knowing that you would not be leaving your loved ones with a legacy of debt.

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