6 Reasons Why You Should Get Life Insurance

We’re all faced with the prospect of taking out life insurance eventually, and we are advised to get it by everyone that knows anything about finances, but why is it so important?

Here, we list the top six benefits of life insurance and why you should consider taking out a policy as early in adult life as possible.

Benefits of life insurance

The benefits of life insurance mainly revolve around your finances and ensuring your loved ones are protected in the event of your passing.

1. Helps deal with loss of earnings and provides financial security

When you pass away, your life insurance policy will pay out a lump sum of money to your loved ones. The amount paid out and who receives it depends entirely on what you agree with the insurers at the time of purchasing the cover.

In the event of you passing away, as well as dealing with the emotion of losing their loved one, your dependants will also be directly affected by the loss of your earnings. Although it will be the last thing on your family members’ minds when dealing with your death, losing out on your income will impact their finances greatly - unless you have life insurance in place.

Your life insurance policy will help your dependants financially with a payout, which can help to cover the loss of your earnings and give them financial stability when you’re no longer around.

2. Covers unpaid debts

Your mortgage and other financial contracts don’t simply disappear when you pass away; all unpaid debts are usually passed on to the family of the deceased, which can cause serious financial issues if no life insurance is in place.

Your life insurance policy can be specifically designed to cover any unpaid debts that remain when you pass away, so that your family don’t have to deal with the financial and emotional stress of covering the payments themselves.

3. Contribute towards funeral costs

Some life insurance policies can be specifically set up to cover the costs of your funeral.

Funerals can often be a lot more expensive than most initially believe, costing on average £3,757 in the UK. The UK’s average cost for a cremation is £3,247, while the average cost of a simple burial is £4,267.

Funerals are by no means cheap, which means that allocating a certain amount of your life insurance to help with the costs can help the loved ones you leave behind arrange the best send-off for you.

4. Cover increasing financial commitments

In recent times, the amount of financial commitments that we now have is more than ever before, including subscriptions and contracts for everything from electronics and entertainment, to bills and utilities.

The life insurance payout your family receives will help them cover any financial commitments that you have, at least until they can find the time to close your accounts.

5. Cover insufficient savings

Due to the current economic climate, over half of the UK population now has less than £5,000 in their savings and one in four adults have no savings fund at all. Therefore, it’s become unlikely that a person’s savings will be sufficient enough to cover the cost of their funeral, let alone provide financial security for their loved ones.

A life insurance policy offers financial security for your loved ones without having to consistently put large amounts of money into a savings account.

6. Peace of mind

All of these benefits lead to one road, which is essentially the only benefit you actually receive from your life insurance policy while you’re still alive – peace of mind.

Taking out a life insurance policy provides you with peace of mind knowing that your family will be financially secure when you eventually pass away, and that they won’t have to deal with your left-over debts, including the cost of your funeral.

You’re reassured that your loved ones will not face any financial difficulty, whether it’s covering your funeral or dealing with the loss of your earnings in their every-day lives.

Types of life insurance and their advantages

As you may be aware, there are a few different types of life insurance available, with each offering varied benefits.

Term life insurance benefits

Term life insurance is a type of life insurance that only lasts a set amount of time, which is decided by the policy holder when they take out the cover. You can choose to use your term life insurance cover to last until your children leave home, go to university, or your mortgage has been paid off, for example.

It is beneficial for policy holders due to its flexible nature and because it tends to cost less than whole life cover. Term life insurance will only pay out if you pass away during the term set out by you, which means you pose less risk to insurers and will therefore pay cheaper premiums.

Whole of life insurance benefits

Unlike term life insurance, there is no time-frame or expiry date on whole life insurance policies. They cover you for the duration of your life and are guaranteed to provide your loved ones with a fixed payout in the event of your passing, whenever that may be.

The only reasons your whole of life insurance won’t be paid out are if you have failed to make all your premium payments in full and on time, or if you lied on your application – about the fact that you are a smoker, for example.

Benefits of over 50s life insurance

Over 50s life insurance is often an ideal choice for those who don’t want the rather substantial cost of their funeral to be left to their loved ones. 

There are many advantages of over 50s cover, including the fact that those who want to take out cover are guaranteed acceptance, often without any medical checks. Most over 50s policies also don’t ask you to keep paying after your 90^th birthday, but you remain covered regardless.

What’s more is that your family is guaranteed a lump sum payout, so you don’t have to worry about outliving any terms (as with term life insurance).

Life insurance at Unite Life

If you’d like to discuss the possibility of taking out life insurance in the UK, our trained advisors at Unite Life are on-hand to help you choose the best cover for your personal situation.

To get in touch, simply call us using our free telephone number or request a call back by completing our simple contact form and we will be in touch at a time that best suits you.