The Importance of Life Insurance
Imagine this situation. You are a 58-year-old woman who spent most of her life bring up three children. In your 20’s and 30’s you raised your first two children, then a delightful gift came along at the age of 42 and your third child was born.
You have had a life of illness. TB as a child, leading to complications later in life. A pregnancy at 42 was a lot for your body to cope with. You go through a hysterectomy, a cataract operation in your late 40s. You develop angina in your 50’s and walking any distance becomes difficult.
At 58 you have a sudden heart attack and pass away. Leaving your 16-year-old daughter, two older children and husband. You have no life insurance or any money to your name.
This person was my mum. A life insurance policy paying out would have softened the blow of such an early untimely death. It would have helped to pay for the funeral, maybe provided a nest egg for the children who were struggling financially as adults and the child (me) that was forced into adulthood too early.
Financial Consequences – The Importance of Life Insurance
One of the financial consequences of this is that I have always understood the importance of life insurance. I took out my very first policy when I took on my first mortgage aged 23. I got some good advice from an independent financial advisor and took out a policy to cover half of the mortgage that I had just taken on with my then boyfriend. It was with Legal & General and cost just £6 a month. I took out a policy to cover £109k on my death, to last for the 25-year term of the mortgage.
The cost has never changed in the 20 years of having the product. It has five more years left before it runs out. The mortgage on that house and the boyfriend are long gone, but I still have that bargain £6 a month policy giving me reassurance that I have a good amount of protection in place if the worst happened.
I am in the process of taking out an additional policy with LifeSearch to cover me for additional mortgage borrowing after a recent change in circumstances.
Why Do you Need life Insurance?
Nothing in life is certain, except death and taxes. A quote that can be traced back to many authors, including Daniel Defoe as the first, in ‘The Political History of the Devil’ in 1726. We are all going to die and to have life insurance in place will ensure that things are easier to organise after the inevitable.
Hopefully, you have a long-enriched life packed full of family, friends, and fun. It would be sensible to leave a financial legacy to those people via a life insurance policy.
It is particularly important for those with dependants and who have financial obligations. Which is exactly where all my life insurance policies have come into fruition. I have life policies that will cover my outstanding mortgage plus a bit extra should I die. This will mean that my children have a fully paid for house and some money left over to pay for the funeral and for themselves. My life insurance policies last the length of my mortgage.
If you own your house outright and/or have investments/pension money held in other places that more than cover your outstanding debts, then life insurance might not be necessary. But for most people it is if you want to protect those left behind after your death.
Things to think about with life insurance
There are a few things to consider with life insurance, all that LifeSearch can help you with. Firstly, the amount of cover you need, as its just as important to not over insure as well as under insure. The term of the insurance should ideally match the length of your mortgage. Do you want level cover, as in cover that stays at the same value for the whole policy? Or do you want reducing cover that reduces as your outstanding mortgage balance reduces?
Why not book yourself an appointment to find out how much it will cost you, you will be surprised at how low the monthly costs can be. Read this post to get lots more information on the full application process that I explain from personal experience with LifeSearch.
Life Insurance requirements change over time
Of course, life insurance requirements change over time. You may move to a bigger house with a bigger mortgage, or a smaller mortgage in a different location. You may get married or divorced. Each life event can change your life insurance requirements. Its always best to get solid independent advice.
I have recently increased my mortgage, after divorce, and needed additional life insurance cover to ensure that my outstanding mortgage balance is covered if the worst happened. I spoke to LifeSearch who helped me to find the most appropriate level of life cover and the best value. The life insurance application will soon be processed, just awaiting a doctors note about a medical condition.
If you ever receive a cold call from a company offering you life insurance, put the phone straight down. Only go to a recommended independent broker, who you know and trust, or has been recommended by a friend or me.
This is a collaborative post with LifeSearch. and contains affiliate links. LifeSearch have very kindly offered me an amazing deal for my readers. You will get either £25 or £50 cashback if your policy is accepted, depending on its monthly value. I will also receive a small payment to say thank you for the referral. And Thank you if you use my referral links:-)