Most importantly, a life insurance policy provides peace of mind that your loved ones finances will be taken care of when you pass away – however, there are other times in your life when a life insurance policy is worth considering.
Life Insurance can simply be defined as a policy you take out with an insurance company. You contribute monthly payments to keep your policy active and should you pass away, your life insurance provider will make a lump sum payment to your loved ones. This sum will be paid to your preselected beneficiary and may be used to cover a wide range of financial commitments.
Most importantly, a life insurance policy provides peace of mind that your loved ones finances will be taken care of when you pass away – however, there are other times in your life when a life insurance policy is worth considering:
When You Are Getting Married
Marriage is a life-long commitment where couples combine finances and plan for their future. It’s also one of the happiest moments in your life and probably not a time when you’re thinking about one of you passing away.
Although it’s a sad thought, preparing a life insurance policy will give you both peace of mind in that each of you is financially protected should anything happen. Getting married is about starting a life together, a life insurance policy protects that.
When You Become Parents
Becoming a parent is one of the greatest milestones in life, and one of the most expensive investments you’ll ever make. According to the CPAG, the cost of raising a child (excluding housing, childcare and council tax) from birth to 18 is now:
The financial cost of raising a child is said to increase even more alongside the rising cost of living within the U.K. A life insurance policy will provide assurance that your child’s financial needs will be met, even when you pass.
Sadly, every 22 minutes a child in the UK will lose a parent that they depend on financially.
What’s more concerning is that a third of parents in the UK do not have any form of life insurance in place.
When You Are Securing A Mortgage
Applying for a mortgage is a lengthy process where you have to prove that you are able to repay the mortgage loan. Some lenders require you to have a life insurance policy before approval so that they can ensure the mortgage debt will be paid in the event of your death.
Even for your own security, a life insurance policy ensures that the remaining mortgage can be paid off, your family home is safe and loved ones do not have to worry about losing their home.
When You Are Starting A Business
Many lenders require you to have an active life insurance policy in order to qualify for a business loan. This ensures that the business loan can be repaid in the event of an unexpected or premature death.
A life insurance policy will also protect your business operations should you pass and it allows for things to keep running smoothly until a successor takes over. If you have a business partner, they are also protected from unexpected financial burden.
Entrepreneurs in particular need life insurance as they work for themselves and do not have an employer to provide life insurance policies. A policy would protect an entrepreneur’s loved ones and support their financial needs even when they’re gone.
If You Are Supporting Elderly Parents
Many people financially support their parents, whether it’s nursing or carer costs, residential care, healthcare, medicine, or general living costs. If you financially support your elderly parents, they are dependent on your income.
You can ensure that your life insurance policy will protect your financial dependents, including your parents, in the case of your unexpected or premature death.
Protecting Shared Debts
In the many cases you may share debt with someone else, a life-insurance policy will ensure that your contribution is upheld and the debt is paid in the event of your untimely death.
Some shared debts may include shared credit cards with a spouse, co-signed loans with family members, your children’s student loans or even shared business loans with your business partner.
An appropriate life insurance policy will protect those that depend on your financial contribution and ensure they do not fall into debt arrears.
Accounts For Drop Stock Markets & Investments
You may be financially secure at this moment with stock and investments, however the market constantly fluctuates and a serious decline in investments is not impossible. Death is unexpected and unfortunately it may occur when the market has dropped. In this case, stock and investments may not be secure enough to support your family financially in the event of your unexpected death.
A life insurance policy that has an agreed payout amount, will pay out no matter what the market looks like. It’s the most secure way of protecting your loved ones in the worst case scenario.
What Happens To My Life Insurance If I Don’t Pass Away?
In this case, it really depends on the type of life insurance you have taken out, but it is worth considering before you purchase a life insurance policy.
Whole of Life Insurance: never runs out and covers you throughout your entire life. So unless you have found the fountain of youth, you will unfortunately pass away at some point and your whole life insurance policy will pay out.
Fixed Term Life Insurance: will expire when the term ends. If you still have financial dependents and financial commitments when it runs out, it may be worth renewing the coverage. At this point you could just renew the old policy or have a discussion with your insurance provider about different life insurance policies.
Return Of Premium: is a life insurance policy that offers a refund on the premiums if you outlive your life insurance’s fixed term contract – essentially a reward for not dying.
Final Thoughts On Times In Life When You Need Life Insurance
No matter what stage you are at in life, a life insurance policy is worth thinking about. It’s also worth considering that the younger you are when taking out life insurance, the cheaper the policy will be.
Major life events like starting a business, getting married or having children may prompt you to think about life insurance seriously, as these are times when your financial contributions matter most. In the devastating event of losing you, a life insurance policy is the most secure and responsible way to protect your loved ones from financial burden.
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