No Life Insurance

By: Katie Jenkins
20-May-2010

Having no life insurance is extremely risky if you have a partner or family who depend on you financially.  The reason is that if you were to die unexpectedly, they would become legally responsible for paying your debts and funeral expenses, as well as having to manage the day-to-day living expenses without the support of your income.  

Nobody wants to think about death, but it's an unfortunate fact that millions die before they have had the chance to get their affairs in order and properly provide for their families.  This can be devastating for the families that are left behind, since they have to deal not only with losing a loved one but also with serious financial commitments.

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Having no life insurance is of course not an issue if you have no dependents and no debts, and also have enough savings to cover funeral expenses.  However, in reality very few people are in this position.  Debts cover everything from outstanding balances on a credit card to mortgages, from overdrafts to car loans and hire purchase on furniture, and these are not financial commitments that you would reasonably expect someone else to have to take on.

A life insurance policy is an agreement with an insurer that if you were to die within a certain time period, your family would receive a lump sum of cash that would enable them to manage financially without you.  There are two main types of life insurance policy.  One type, known as 'term insurance', will only cover you for a set number of years.  If you die outside this period, even by a matter of month, you would not be covered.  This added risk makes term life insurance the cheapest type of life insurance.

The other type of life insurance is known as 'whole of life insurance'.  As you'd expect from the name, this type of policy will cover you no matter when you die.  This makes it a more expensive type of insurance, but as you pay premiums over a number of years, the policy builds up a value that can be cashed in if you choose to cancel the policy (known as the 'surrender value).

The best way of finding the right life insurance policy for your needs is by speaking to an insurance adviser.  It might be for example that you only need a policy to cover you until you have paid off your mortgage, or until your children have completed their education.  An adviser will be able to find you the right policy for your circumstances.  Don't delay any longer, as the worst thing you can do for a family that depends on you financially is to spend another day with no life insurance.

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