Life insurance is often considered a non-essential expense, particularly among young families, but have you considered how you and your family would cope if you suddenly lost your income?
Life insurance is designed to protect your loved ones – and pay off your debts – if you pass away unexpectedly. If you have a mortgage or dependents, life insurance is a good idea whatever your age. But according to research conducted by Finder, 8.5 million people in the UK do not have life insurance, meaning their families could be left in a precarious situation if the unforeseen were to happen.
A risky position
The impact of losing the family breadwinner can be devastating – missed mortgage payments, savings depleted, the family home being sold, standard of living eroded, with stress and worry all too evident. Despite this, many people don’t consider having insurance as a necessity. Instead they would rely on savings, even though this may only cover a few months worth of bills.
Life is full of uncertainties – and while we insure cars, houses and even holiday arrangements, when it comes to ourselves and our family, often insurance is overlooked and undervalued. The simple truth is we can get too ill to carry on working or tragically die too soon, either through serious illness or accident. These events are random, and they can potentially affect us all.
The value of protection is to provide peace of mind about having financial security in place for your dependents. Life insurance and critical illness cover will ensure your family is provided for, should the unforeseen happen to you.
Life insurance – A life insurance policy usually only pays out if you pass away. It’s designed to help families maintain their lifestyle after an earner has gone, for example, to pay off a mortgage or other loans and provide financial security for dependents.
Critical illness insurance – Critical illness cover pays you a lump sum in the event that you are diagnosed with a critical illness. It could be used to pay the bills or pay off debts should you lose your income due to long-term illness. It doesn’t usually pay out if you pass away, therefore it wouldn’t be suitable to provide for a family after you’ve gone.
Many insurers will offer a combined life insurance and critical illness policy to cover against most eventualities.
Recent changes to bereavement benefits and their continued unavailability to those in cohabiting relationships, mean that it’s more important than ever for family breadwinners to review their financial protection needs and seek advice to make sure their household is covered.