Who needs life insurance?

If a member of your family is likely to suffer financial difficulties following your death, then it’s likely that you’ll need to take out a life insurance policy.

This could be your spouse, your children or another family member that is currently dependent on your income – protecting them with a life insurance policy ensures that they will still benefit financially once you are gone.

A payout from a life insurance policy can help your family to cover essential costs associated with your death, such as funeral expenses. It can be used to pay off outstanding debt such as your mortgage or could be used to benefit your family in the future such as paying for university tuition fees or helping your children onto the property ladder.

If you are wondering whether life insurance would apply to your situation, here are a few typical scenarios for you to consider:

You’re married or in a civil partnership

If one of you died tomorrow, how would the remaining partner cope financially? Would they be able to afford to pay off outstanding debts such as credit card balances? Would they be able to afford to maintain the monthly mortgage or rent payments?

Even if the partner on the lowest income were to die, it could mean added pressure for the remaining partner, if they suddenly had to cover extra expenses each month.

You’re married with children

Most families rely on two incomes to make ends meet. If one parent were to die suddenly, not only would this have huge emotional implications but it could throw your family into real financial turmoil.

If your current priority is providing a roof over your children’s heads, and ensuring a continuing standard of living then this shouldn’t have to change if you die. Having life insurance in place will give you peace of mind that your plans for your family’s future remain, even after you’re gone.

You’re a single parent

As a single parent, life insurance is perhaps more of a priority than ever. As sole caregiver AND breadwinner, your children rely on you for everything – if this was taken away then life could become increasingly difficult.

It’s not a nice thought, leaving children without a parent, however if the worst should happen you’ll want to know that they’re being well looked after – and having life insurance to cover this will safeguard your children’s future.

You’re a stay-at-home Mum or Dad

It’s not just the sole income earner that needs to think about life insurance – just because you don’t make a financial contribution to the household shouldn’t devalue what you do offer for your family. Childcare, transport and general household duties are all extremely important – and if you weren’t around to provide this, then how would your family cope?

The death of a stay at home parent can mean a decrease in the main wage earners hours or an increase in additional childcare costs so having cover in place can avoid a whole host of difficult decisions.

You’re retired

You’ve paid off your mortgage, and your children have moved away from home and are financially independent. Why would you need Life Insurance?

If you have any other outstanding debts, it may still be worth thinking about a life insurance policy – after all, your spouse may be left with this burden after you’re gone. You may not need as much cover as someone who’s looking to pay off their mortgage or provide for their family, but you may wish to think about insuring yourself for a small amount.

The payout could be used to cover your funeral expenses, cover an inheritance tax bill or may just be used to leave a cash lump sum to your loved ones, or even your favourite charity.

You’re Single

Generally speaking, if you’re single with no dependents then you probably don’t need to think about Life Insurance, however there may be some exceptions.

If you’re likely to provide financial support or care to a parent or sibling then you may think that having a life insurance policy in place is a good idea after all. Or it may be that you have a significant amount of debt that you don’t want passing onto other family members who survive you.

The main benefit of taking out life insurance while you are young, free and single is affordability. Life insurance premiums will rise with age, so if you’re in good health now, then you’re likely to be rewarded with the best rates.