These days, we’re quick to insure our car, our belongings, our pets and even our mobile phone. But what about the most important asset we own – ourselves?
Making sure your loved ones are provided for if the worst happens to you can give you huge peace of mind. And, you’ll often find that the cost of life insurance is less than you expect. Depending on your age and health it can be cheaper than insuring your laptop or your dog, so it’s certainly something you should consider.
As protection specialists, we normally suggest that you consider life insurance if you fall into one or more of the following groups.
If you have children, one of your first priorities as a parent is to ensure that they are cared for and looked after. That shouldn’t change even if you’re no longer around.
You probably have big plans for your children and want to ensure that they have the very best life. Could they do this if something happened to you? Would they be able to carry on living in the family home? Could they go to university or college, or buy a home of their own?
Making sure a lump sum is in place ensures there is financial support for your children if the worst happens to you. This can be put in trust for younger children, so you can nominate trusted people to look after this money and to do the right thing by your family.
If you have a partner, spouse, or civil partner your lifestyle is probably based on your combined incomes and your collective buying power. You may share rent, mortgage or bills. You may also have a joint account for your regular expenses. In this scenario, how would they cope financially if something happened to you?
Alternatively, your spouse or partner may be caring for your children, or they work in a job earning less than you. Again, what would happen to them financially if you were the first one to pass away?
If you are part of a couple who are financially dependent on each other, it’s wise to make sure a lump sum is available if something happens to you. It could replace your income and help your partner to continue to afford the monthly bills at a very stressful time.
In addition to making sure there’s money available for your partner or family, it’s also sensible to make sure you have enough protection in place to pay off any large debt you’re responsible for – such as a mortgage.
Whether you’re a married couple or you’ve bought a home with another party, and assuming you bought the home based on both incomes, it’s a good idea to have life insurance in place to protect both owners from the loss of the other party's income.
If you have a capital and interest (repayment) mortgage, there are specific life insurance policies available designed to pay off any outstanding mortgage balance in the event of your death. These can be an extremely cost-effective way to ensure there’s a lump sum in place to repay your home loan if you die during the mortgage term.
Putting the right cover in place means you benefit from the peace of mind that your spouse, partner, or family can remain in your home after you have gone.
Beyond replacing your income and repaying your debts, it’s important to have enough life insurance coverage to protect your interest in any illiquid assets, such as a business.
As a business owner, you often have to put in every available penny you have for years before you can draw an income from your company. It can be even trickier to extract any value that you have built up in that business by turning it into actual pounds and pence.
So, if you pass away, you want to be sure that your estate receives the value of your life's work.
Also, it can be challenging if you have a co-owner, partners or there are other shareholders in the business. If a partner or key employee in a business were to die unexpectedly, it could pose a substantial business interruption for the rest of the team and harm their ability to perform their duties as normal.
And if your business did not have the necessary cash available to buy out the deceased partner's spouse or children, you could be forced to sell.
Making sure you have the right protection in place gives you the peace of mind that your partner, family and business are financially supported when you’re no longer around. And, it might cost significantly less than you expect.
To find out what protection is appropriate for you, please get in touch by calling us on 03300 583 859.