Do you really need Life Insurance?

Man carrying two small children

“If you’re someone with a mortgage, a family and kids, have debts owing or you’re the main earner and don’t have a substantial amount of savings, the payout your loved ones would get if you were to die could be a lifeline”

With life insurance, you make a monthly payment to an insurer and in return they agree to pay out a set amount to your dependants in the event of your untimely death. If you’re fit and healthy and just starting out in your working life with little cash and lots to sort out, it’s an expense you might think you can avoid. But life insurance isn’t something that just becomes relevant in your silver years – it’s important to consider at key landmarks in life, such as buying a house with a partner or starting a family. If you’re someone with a mortgage, a family and kids, have debts owing or you’re the main earner and don’t have a substantial amount of savings, the payout your loved ones would get if you were to die could be a lifeline. 


Life cover can also be valuable for those without a large debt to repay. For a young couple who are renting, for instance, a death may make those rental commitments or fixed-cost bills impossible to meet for the remaining partner. 


So, if family members or loved ones you’re going to leave behind would suffer financially if you died – maybe they will struggle to pay the mortgage or bills – then it’s a good idea to get some sort of life cover overall and let your dependants know the details of your policy. 


Remember, some companies provide life cover as part of their benefits package, so it’s also worth checking this with your employer.

“A policy of life insurance is the cheapest and safest mode of making a certain provision for one’s family”
- Benjamin Franklin, 1769

How much cover do you need?

Good question. Generally, the answer is as much as you’d need to fill any financial gap left by your death. 


You should ensure that your outstanding debts would be paid off, including your mortgage and any loans, and that you think about how much cover you might need to pay for things such as childcare, school fees or higher-education costs.


It’s also important to consider flexibility within your insurance policy, to allow you to review it as your situation or family life changes over time. 


Enlisting the help of a financial adviser can be valuable, as they can look at your personal situation and assess what kind of cover you need. But remember: the bigger the payout you want, the higher your premiums will be, so you need to factor in affordability. Which brings us to the cost. 


It doesn’t have to be expensive – life insurance is a particularly competitive market. 

What you pay depends on your age, health, lifestyle, smoking habit, policy length and amount of money you want to cover.

Typically, if you’re younger, fitter and healthier, insurance is cheaper. If you’re a smoker, overweight, older, a drinker or just unhealthy, it could be more expensive. Oh, and before we forget, it might also be pricier if you have a risky job – think armed forces, professional deep-sea diver or sportsperson. In that case, either consider taking up knitting instead or find a specialist broker who can help you. 

Fresco of roman funeral
Rome’s funerals weren’t planned in a day
The concept of life insurance goes as far back as ancient Rome, where low-income individuals made regular contributions to burial clubs. Eventually, this money would go towards the cost of their funeral to ensure they had a dignified send-of