Life Insurance Coverage: Who Exactly Needs it?

No matter what stage you’re at in life, having some form of protection can make all the difference. The need for life insurance can vary based on individual circumstances.

Whether you’re about to start a family or looking to protect a mortgage, it’s a great way to protect your loved ones if the worst happens. Here are some of the main types of people who can benefit from life insurance cover:

Married Couples

They say marriage is one of the most significant commitments you can make. It means sharing the responsibility for each other’s wellbeing, not just financially but emotionally. Owning cover can be a way for married couples to ensure that both partners are cared for in the event one passes away.

One type of cover that’s ideal for couples is joint life insurance. With it, two people are protected under one policy. This, in turn, may work out cheaper than buying separate policies.

Joint cover typically pays out after the first death in the couple known as ‘first death’. You can also opt for a policy that pays out after both you and your spouse/partner have died. The money can then go to your children or other family members.

Parents/guardians

Kids come first. With life insurance, parents or guardians can make sure that their little ones have some financial security if the worst should happen.

If you die, the policy pays out a cash lump sum which can be used to support your children in some ways, such as:

• Paying off any debt or mortgage payments
• Covering the costs of education and childcare
• Providing financial security for them in the future.

The cash lump sum can also be used to pay for funeral expenses, allowing families to grieve without worrying about money. If you’re a parent, it’s an easy way to give your children a financial safety net for the future.

Young Adults

Term life insurance can be a cost-effective option for young adults who are just starting out in their careers. This provides cover for a specific period of time, typically 10-30 years, and can be tailored to match your needs and financial goals.

Empty nesters

Once your kids have grown and are financially independent, you may not need as much life insurance cover.

However, it can still be handy for covering final expenses, or to leave a legacy for your loved ones. Consider changing to a permanent policy, such as whole life insurance, which provides cover for your entire lifetime.

Retirees

Life insurance can still play a role in your retirement planning. A policy can provide financial protection for your loved one’s if you have dependents or outstanding debts. You could also use it for estate planning, or to leave a charitable donation of your choice.

Changing jobs

If you have insurance through your employer, you’re not out of the woods yet. In most cases, these policies only stay in effect whilst you’re employed with said company. If you move jobs, your cover may be ended. In this case, having your own policy can help to make sure you are properly covered in the event of death.

Homeowners

If you have a mortgage or other debts, it can help ensure that your loved ones aren’t burdened by it upon your death. The payout can be used to pay off any debts, including the mortgage, so your family can continue to live in their home.

Mortgage life insurance (aka decreasing term life insurance) is a type of policy specifically designed to protect your mortgage. The payout decreases over time as you make repayments. If you die before it’s repaid, your loved ones can use the money to cover the remaining balance.

How much does life insurance cost?

The cost of cover is different for everyone and depends on a range of factors. This includes:

• Your age – In most cases, the younger you are, the less expensive your premiums will be. Plus, if you opt for a policy with fixed premiums, your costs will stay the same.
• Your health – Insurance providers assess your health and lifestyle when calculating premiums. The healthier you are, the lower your premiums tend to be.
• The type of cover – As different policies offer different levels of protection, the cost of cover will vary between them.
• The amount of cover – The more cover you opt for, the higher your premiums.

You can get a quote on life insurance online to see how much it would cost you. Ideally, you’ll want to choose a policy that’s within your budget and will provide enough cover for your needs.

How much cover do I need?

Everyone has a different situation. For some, they may have a family to provide for, others may have existing debts to cover or need to leave a legacy for their kids.

Ask yourself:

• What do I need life insurance for?
• Do I have any dependents or debts that need to be covered?
• How would my family cope in my absence?
• What are my long-term financial goals?
• Do I already have cover in place? (i.e employer-provided plan)

The best way to determine how much protection you need is by speaking with an insurance expert. They can help review your individual circumstances and provide advice on the amount of cover that best suits your needs.