Life Insurance – What Is It, Do You Really Need It, & How Much For?

Life insurance is like any other insurance, but a tad darker. Something you need, but hope you’ll never have to use.

But do you really need it?

If so, how much do you insure yourself for?

And do you really need all the added extras that go with it?

Is It A Necessity?

This can depend on a number of factors, but mainly these two: Do you have a mortgage, or any dependants?

Most, if not all, mortgage companies will stipulate that in order to qualify for a mortgage, you will need life insurance. Surprisingly, they want a solid guarantee that come what may, they will get their money back; whether you are here to give it to them or not.

The other main reason for considering life insurance should be any dependants or loved ones you will leave behind. As morbid as it seems – consider the following situation.

You are the main breadwinner – or even just contribute to the bills. You have a family; a spouse, and maybe a few kids. If your time is up – life still goes on around you. Those loved ones still need to live, to eat, to use electric, water, and have a roof over their heads. They will be doing all this, whilst grieving… The last thing they need to worry about is having enough money to pay British Gas at the end of the month.

By getting life insurance sorted, if the worst should ever happen, you will have eliminated one huge problem, which will be (temporarily at least) taken care of.

What Are You Worth?

An extremely tricky question. Once you get over the fact you are priceless – you need to start crunching some real numbers. The biggest being a mortgage, if you have one. More specifically, what is remaining on your mortgage. If you have £150,000 left, you’d need to at least cover that. Also think about any long term or large debts you may have, or outstanding finance plans.

After that, you can get creative. Do you want to leave enough money for the rest of the bills to be paid? If so, for how long? After all, no one wants to go through the trauma of losing someone, and then have to go back to work after two weeks because they have no other choice. Do you want to leave money for your children, to get through university, or for their own house deposit one day? Or a financial safety net for your spouse?

Just remember, the more money you insure yourself for, the more the monthly premiums will be.  

Added Extras

As with any insurance, you will always get offered additional products that you may, or may not require. The main one will be critical illness cover. This usually covers serious illnesses such as heart attacks, strokes and cancer, but will vary from company to company. Always double check with your chosen company before you purchase, to make sure it covers you for what you need.