Should I consider life insurance?

Adverse effects of the pandemic have included confusion, anxiety, relief at times, feelings of division and unity. However, throughout this process, one topic has remained ever-present...uncertainty.

Uncertainty is something which has an impact on each of us and is something which, to some extent, could be mitigated by life insurance.

Life insurance or, strictly speaking, life assurance, is the concept of paying a lump sum or income on the death of the policyholder. Some life assurance policies can also pay out upon diagnosis of a critical illness. 

Our health is something that we have limited control over, but we often take good health for granted. Unfortunately, this is not always the case.

Life insurance can be used for numerous reasons, such as:

• protecting against debt (in most cases an outstanding mortgage) 
• to support family members on the death of a breadwinner, or;
• if they are no longer able to work due to illness 
• to insure against Inheritance Tax liabilities

According to the Money Charity, the average total debt per household in the UK was £59,319 as at July 2019. Based on projections from the Office for National Statistics, this is expected to continue rising. This is a stark reminder that debt is very much a common part of modern society. It raises the question - what liabilities do you have and what would happen if you were unable to meet these?

Statistics from the Association of British Insurers have shown that the number of people with life insurance across the UK has decreased since last year’s study. As a nation, we are very good at insuring our cars, our homes and even our pets. But why do we not make insuring ourselves a priority? COVID-19 may well encourage more people to consider their own health and mortality whilst looking towards the future.

So, in what circumstances should you consider life insurance? Here is a list of common reasons someone may think about life insurance:

• You are having a baby - a new addition to your family will mean extra costs. In addition to this, you may be going from two incomes to one, which would make a safety net even more important. 
• You are getting married - your partner may rely on your income in order to maintain their standard of living. 
• You provide financial support for someone else - aside from your partner or your children, you may also support someone else financially such as your elderly parents.
• You are self-employed - if you work for yourself, your income will likely be dependent on your own output. You will not have support from an employer should you be unable to work. Income protection is particularly important for someone who is self-employed. There are also various options available for business owners looking to protect their business. 
• You have debts or liabilities - what would happen to your debt (for example an outstanding mortgage) if you died or were unable to generate income to repay the debt or maintain the monthly payments? This could have an adverse effect on the lifestyle of your loved ones or yourself.  

The good news is that there are solutions available to cover most needs.

If you would like further information regarding life insurance or wish to discuss your options in detail, please do not hesitate to contact me on 01206 217329 or trey.vella@birkettlong.co.uk.