Life Insurance - why do you need it?

You may want Life Insurance to provide some financial protection for the family or to cover the payment of an Interest Only Mortgage.

STEP 1 of 2
Type of cover
Life Insurance       Mortgage Life Insurance
 
Cover Level (£)

Number of years
Do you want:  
Critical illness cover
Family income benefit
 

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Life Insurance - why do you need it?
You may want Life Insurance to provide some financial protection for the family or to cover the payment of an Interest Only Mortgage.
Should you have a “Guaranteed” or a “Reviewable” policy?
With a Guaranteed policy your insurance company Guarantees never to increase the premium at any time during the policy’s term.
Should you include Critical Illness cover on your Life Insurance policy?
You should certainly consider taking out Critical illness cover whether you combine it into your Life Insurance policy (which is by far the cheapest way to buy both insurances) or you take out separate policies (which gives you far more protection – see below).
Should the cover be on joint lives or separate lives?
It may be better to buy separate policies.
Can you have different levels of cover on a joint life policy?
Yes you can - but it may be better to buy separate policies.
There is no law that says you must have Life Insurance, but many people do consider it a vital aspect of financial protection. It can provide some financial peace of mind if the worst were to happen. Many people simply want it to help provide a tax-free lump sum for their family or relatives if they were to die.

Another frequent use is to repay a Mortgage if the mortgage holder were to die. Taking out life insurance ensures that you can be certain that your mortgage will be completely paid off if you die during the policy’s term. Usually it will be a condition of the mortgage lender that you take out Life Insurance to cover a mortgage.

If you do not have dependants, you may feel that it is better to take out Critical Illness Insurance. That way you benefit from the cover yourself if you become critically ill or permanently unable to work through illness or injury.

If you do have a family you should consider insuring against critical illness as well as taking out Life Insurance, so that the mortgage would be paid off or a lump sum provided if you become critically ill or unable to work.

Frequently Asked Questions related to the above topic.
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