Life insurance can assure policy holders that their family will not be left in financial difficulty if they were to die. However, the subject of life insurance can also be complex and confusing. While it can provide security for some people, others may not need it at all. Understanding what the insurance covers and assessing the impact of your death on others can help you to decide whether you really need it.
Advantages of life insurance
There are a number of benefits to holding a life insurance policy, with the main advantage being the assurance that family members will be provided for after a person’s death. The lump sum paid out by the policy can take care of debts and funeral costs that could cause further distress at a difficult time. Policies can also be tailored to each person’s individual needs. For people with no serious health problems, life insurance is a relatively cheap and easy way to gradually prepare for the worst eventuality.
Who can benefit from holding life insurance?
People with little money in savings to leave behind can benefit from holding life insurance, with the cost of monthly premiums often being more affordable that having to find the cash to save a lump sum of money over a short period of time. Those who provide the main source of income for a young family can have the peace of mind that their family will be looked after if they were to die unexpectedly. Life insurance is also a good choice for people with a number of debts as it ensures that their families will not be left with large sums of money, including mortgages, if someone were to die.
When is life insurance not needed?
Those who may not need life insurance include people who have no partner or children and older people who have retired and have paid for their home in full. People with no immediate need for a life insurance policy may find that other investments are a more suitable option for them. If a person has no outstanding debts, no immediate family and enough money saved to pay for funeral expenses, paying for life insurance premiums may be of little benefit to them. In some cases, an employer may provide their staff with sufficient life cover for any other policies to be unnecessary.
Alternatives to life insurance
Savings accounts with healthy balances may have sufficient funds to provide security for any family left behind on the event of a person’s death. People with no dependants may also find other forms of insurance to be the best choice for them. Income protection insurance can provide peace of mind that expenses such as mortgage payments will still be met if a person loses their job. Critical illness cover is another option for some, providing financial security if someone is unable to continue working due to developing a critical illness.
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