There are many stages in life when we should re-evaluate the need to protect our families.
No one likes to think about a time after they’ve gone. Yet there are milestones in our life that do, or should, prompt us to think about the future and what might happen to those we leave behind. That’s where life insurance can provide peace of mind for you and your loved ones.
1. Single adulthood
If you’re a 20-something, you’re more likely to be single and not to have children; so you might not have given life insurance much thought. But there are several reasons why you might want to think again.
Do you have credit card debts or a university loan, or do you share a debt, such as a mortgage, with someone else? Having life cover in place can ensure that your debts are paid off in the event of your death, rather than putting that additional burden and strain on those you leave behind.
You may decide to settle down in your 30s or 40s. As plans for marriage and starting a family become a reality, the reasons for having life cover become far clearer. But the downside is that, by then, you may be facing higher premiums. So, it can be cost-effective to buy life insurance when you’re younger.
2. Getting married
When you marry, you accept responsibility for another life, and shared responsibility for income and debts. Death will leave the surviving spouse responsible for both; but having life cover in place enables you to contribute to your partner’s financial security after you’ve gone.
A mortgage is the biggest debt most people are likely to incur, so enabling your partner to pay off the balance if you die is one of the most important things you can do for them.
Joint term insurance is usually cheaper, but in most instances only pays out once: which would leave the surviving partner needing to take out their own policy after that, when it could be more expensive. Two single policies can typically provide a higher level of protection and can pay out on the deaths of each person. It’s also worth bearing in mind that it removes some complications if the relationship comes to an end.
Having adequate life insurance for each parent is critical when your children are young. Raising a child is expensive, even before factoring in things such as private education and university costs.
Whilst the first thought might be to have cover in place for the main breadwinner, the value of the role performed by stay-at-home parents also shouldn’t be overlooked. It can be especially difficult to assess the potential financial impact of the death of a parent who spends most of their time looking after children and the household. A good starting point is to estimate the costs of buying in these services.
If you’ve divorced, you will want to consider steps that ensure children are provided for when you die. There are various trust structures that can be used to give you the assurance and peace of mind that your chosen beneficiaries will receive what you wish them to and cannot be excluded by events or actions that are taken after your death.
4. Owning your own business
If you’re self-employed, there’s a good chance you have invested substantially in your business. Adequate life cover can ensure that any debts the business has incurred are covered in the event of your death, avoiding the need for your family to find the funds or, potentially, sell the business you might have hoped to pass on.
5. Empty nesters
By the time you are in your mid-50s, there is every chance that your children will have flown the nest and that your mortgage is all but paid off. But that doesn’t mean you should stop thinking about protecting your family and wealth.
It’s still important to have life cover in place if you have financial dependants, such as a spouse. If you have a large estate and are concerned about Inheritance Tax (IHT), then a life insurance policy placed in the appropriate trust can provide a sum of money to pay the tax bill after you die, so that your estate can be passed on in full to your family.
Whether you are young or old, life insurance underpins most good financial planning, especially for those with financial dependents.
In the UK, Trusts are not regulated by the Financial Conduct Authority.
Monay is a total Ai wellness assistant and platform. Driven by a team of award-winning experts. Our mission is for Monay to help people achieve their full potential and well-being in order to make the world a happier, greener, and healthier place.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
|cookielawinfo-checkbox-analytics||11 months||This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".|
|cookielawinfo-checkbox-functional||11 months||The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".|
|cookielawinfo-checkbox-necessary||11 months||This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".|
|cookielawinfo-checkbox-others||11 months||This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.|
|cookielawinfo-checkbox-performance||11 months||This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".|
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.