Life insurance is something you hope you never have to use, but when the time comes, you’ll be glad it’s there. It provides financial protection for your loved ones in the event of your untimely death and can offer peace of mind, knowing that they will be taken care of.
Much like keeping a spare tyre, you can always choose not to have one, but by doing so, you run the risk of leaving your family unprotected should something happen to you. So when could life insurance come in handy? Here are four scenarios where having cover could make a real impact.
1. Getting Married
There’s no better feeling than starting a new chapter with the person you love. While it’s the start of a new whole journey, there are also the added responsibilities that come with marriage. For starters, you may now find yourself financially responsible for your spouse and vice versa. This means that if something were to happen to one of you, it could seriously impact your joint financial situation.
Without your income, your spouse could find themselves struggling to maintain their standard of living. This could mean they have to relocate, cut back on expenses, or even take on extra work to make ends meet.
Whereas if you have life insurance, the payout from your policy could be used to support your spouse in such troubling times. Most notably, it could give them some breathing room to grieve without the added stress of financial strain.
If you haven’t already bought a policy, you may want to do so before you tie the knot. One policy you may wish to look into is joint life insurance. This can cover two people under one policy, often popular with couples. That way, if one of you were to die, the other would have the necessary support in place.
2. Buying a Home
For many of us, buying a home could be the biggest purchase we make in life. On top of that, there’s all the work you put into it, such as mortgages, maintenance, and renovations. Just like any asset, there are protection products available for your home, such as home insurance, but life insurance can also be used too.
One of the ways life insurance can help your family is by providing a cash lump sum once you die. This money could be used in a number of ways, which include paying off your home’s mortgage.
If you and your partner own a joint mortgage, your lender will still require payments to be made. If not, they could repossess the property. Or, in another case, your family may be forced to sell the home and move somewhere more affordable.
If you’re looking to buy a house, it may be worth buying life insurance alongside your mortgage. Decreasing term life insurance, for example, lasts for a set amount of time, which can be linked to a repayment mortgage. As your mortgage balance reduces over time, so will the cover amount of the policy. That way, if you die before it’s repaid, your family can use the remaining proceeds to pay off the mortgage.
3. Supporting your kids
As a parent, there’s nothing you wouldn’t do for your kids, but sadly that can’t be said if you are no longer around. Without your support, your spouse may struggle to provide for your children on their own which could see them miss out on opportunities and experiences alike.
Even if you have savings in place, it may not always be enough to ensure your children receive the quality of life you envisioned for them. Life insurance can help bridge that gap, with the payout being used to cover essential expenses such as education, childcare, and everyday living costs. That way you can help provide for your children even in your absence, supporting them for the future ahead.
If you have a baby on the way, it may be time to take out life insurance cover. There are two main options available for parents: term life insurance and whole life insurance.
Term life insurance provides coverage for a specific period, typically 10, 20, or 30 years. This can be particularly beneficial if you want to ensure that your children are protected until they become financially independent.
Whereas whole life insurance provides cover for the rest of your life, as long as your monthly premiums are paid. In essence, it provides a greater sense of security for you and your loved ones in cases of unexpected tragedy.
4. Covering your funeral Expenses
Funerals aren’t cheap, in fact, they can be quite costly, often leaving a significant financial burden on your loved ones.
When you pass away, your family may face unexpected costs related to your funeral, including service fees, coffins, burial plots, and other related expenses. These costs can quickly add up and may not be factored into your family’s budget. Life insurance can alleviate this financial strain by providing a lump sum payout that can be specifically allocated for funeral expenses.
By planning ahead with a life insurance policy, you ensure that your loved ones are not left to shoulder the weight of these costs during their time of grief. This foresight allows them to focus on honouring your memory rather than dealing with financial worries.
If you have a funeral plan, it may also be worth having life insurance, which offers a broader scope of financial protection. A funeral plan usually covers just the costs associated with your burial or cremation, while life insurance can provide extra funds that can be utilised however your family require.
If you think you could benefit from life insurance, get the ball rolling by searching for one of the many life insurance companies. If you need any advice, it may be worth speaking to an insurance broker or advisor who can guide you through your options.
