Home > Managing Your Money > Do I Need Life Insurance?

Do I Need Life Insurance?

By: J.A.J Aaronson - Updated: 24 Oct 2012 | comments*Discuss
 
Life Insurance Policy Premium Premature

Life insurance is a subject about which people do not generally like to talk. Serious discussions about what is seen as a morbid topic is all too often avoided, perhaps because it is seen as tempting fate, or, more worryingly, because it is not seen as a necessity.

Of course, these people almost certainly have home insurance. They almost certainly have car insurance. They almost certainly have travel insurance if they go on holiday, and they will almost certainly have business insurance if they run a company. Considering that all of these comparatively superfluous, ephemeral items are insured, why not your life?

Financial guarantee

Life insurance is much the same as any other type of insurance. By taking out a policy you guarantee that your dependants will be catered for after your death, and will be able to continue a lifestyle similar to that which was granted to them by you as the breadwinner of the family. Obviously, the degree of financial assistance given will depend on the level of cover you have arranged but, if you are prepared to put away just a few pounds a week, your could cover at least your debts after you die.

Common sense says that, if you are the main or sole breadwinner in your household, life insurance is a necessity. In these cases, the aim is to ensure that your partner would be able not to work during your children's early years. Similarly, if both parents work, the death of one would probably mean that the remaining income would not be sufficient to maintain the family's lifestyle. A good policy could be used to at least secure the house after one parent's death.

Lower incomes

Those with lower incomes are posed with more serious problems. For example, if you are a single parent supporting a family, there may be no-one else to look after your children financially after your death. A life insurance policy is, therefore, essential, but may not be affordable. In these cases you must strike a balance; your immediate priority will probably be to maximise your quality of life, but you should also consider insurance and a pension. There is no point in over-insuring yourself at the expense of your lifestyle or, indeed, your pension. While premature death is an unavoidable risk, it is less likely than becoming dependant on a pension in later life. Similarly, if you have no dependants then life insurance is of no interest to you; your money is better spent on savings.

In all of these situations, the most important aspect of any life insurance policy should be to write off your debts. The largest of these is likely to be your mortgage and so this, at least, should be 100% covered; otherwise, your dependants may well lose the house if the remaining partner (presuming there is one) does not draw down a large enough income to make the repayments.

The conclusions to be drawn about life insurance are simple. Although it may be a topic about which we do not wish to think, let alone talk, it is a necessity for a responsible adult with dependants.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • MoneyExpertise
    Re: How Much Tax do I Have to Pay?
    Georgia - Your Question:I don’t normally get taxed as I earn around 800 a month however this month I have done overtime and…
    21 June 2018
  • Georgia
    Re: How Much Tax do I Have to Pay?
    I don’t normally get taxed as I earn around 800 a month however this month I have done overtime and should be getting just…
    20 June 2018
  • Dave
    Re: A Guide to Unemployment Benefits
    Hi, I am going to be out of work for 8 weeks due to no work available. I’m a free lance teacher and will be off for the whole…
    19 June 2018
  • G.S.
    Re: A Guide to Unemployment Benefits
    My daughter has been laid off for 8 weeks, she still has another job of 10 hrs a week, she claims nothing, can she get…
    15 June 2018
  • MoneyExpertise
    Re: A Guide to Unemployment Benefits
    Pat - Your Question:My son lost his job I December last year.he had never claimed benefits before in his life.He is now 58…
    15 June 2018
  • Pat
    Re: A Guide to Unemployment Benefits
    My son lost his job I December last year .he had never claimed benefits before in his life. He is now 58 and has used all…
    15 June 2018
  • MoneyExpertise
    Re: A Guide to Unemployment Benefits
    KG - Your Question:My sister is currently on sick leave from work since October last year with no sign of improving and is…
    12 June 2018
  • Jess
    Re: A Guide to Unemployment Benefits
    @The Roth - the problem with Jobseekers Allowance is that you have to be looking for a job. I'd give them a call because you…
    4 June 2018
  • The Roth
    Re: A Guide to Unemployment Benefits
    I am on a contract that is due to end at the end of July as a teaching assistant. I am going on to do teacher training which…
    2 June 2018
  • Annie
    Re: How Much Tax do I Have to Pay?
    I have recently retired and I have just received my first month of a nhs pension which should be £440 per month and I am not…
    27 May 2018
Further Reading...
Our Most Popular...
Add to my Yahoo!
Add to Google
Stumble this
Add to Twitter
Add To Facebook
RSS feed
You should seek independent professional advice before acting upon any information on the MoneyExpertise website. Please read our Disclaimer.