Do you really need life insurance? It’s certainly not an easy decision to make, especially for younger people. It might seem like just another expense (and a major commitment to boot) but the real question to consider is this: can you afford to not take out life insurance?
Here are some of the main reasons people get life insurance.
Taking care of funeral expenses
Funeral and burial expenses can run well into the thousands of euro. In fact, the average cost of a funeral in Ireland is €4,062. In the event of your death, adequate life insurance will provide your loved ones with a lump sum that can help cover these costly bills. This will be a difficult enough time for your family without having to worry about money.
Supporting your children/partner
If you weren’t around to provide for your dependents, how would they cope? It’s possible that your partner may be accustomed to a certain kind of lifestyle and this will probably be unsustainable without your salary. You may also want to leave behind enough money to see your kids through college. Having adequate life insurance can help to take care of your loved ones long after you’re gone.
Leaving an inheritance
Even if you don’t have any businesses, properties or valuable possessions to pass on to your heirs, naming them as beneficiaries in your life insurance policy can provide them with an inheritance. This can really help to set your children up financially as they enter adulthood.
Paying off debts
If the unthinkable happens your family would need to pay off any existing debts in your name, for example loans, credit cards or a mortgage. Without the proper finances, they could be forced into selling your house. Life insurance provides loved ones with a safety net in these kinds of circumstances.
Peace of mind
We can’t know when it will happen but one thing we know for sure is that we will all pass away one day. No sum of money can make up for the loss of a loved one but there is comfort in knowing that your family won’t have to worry about the financial side of things after you’re gone. That’s the greatest benefit of life insurance: peace of mind.
What are the different types of life insurance?
Decreasing life cover
Decreasing cover pays out a lump sum if anyone on the plan dies. This is cheaper than term or whole of life cover. The amount you pay reduces each year because this cover is often chosen to help provide income for your family. The longer you live, the less money your family will need to replace.
Term life insurance
This is cheaper than whole of life because it only covers a period of time. If you die within a certain number of years (20, for example) a lump sum will be paid out to your family.
Whole of life insurance
Also known as lifelong insurance, this covers you for your entire life. The main uses of this type of policy are to cover funeral expenses and to protect your family from inheritance tax.
Mortgage life insurance
In the event of your death, your mortgage will be paid off.
Pension life insurance
This covers you for a specific amount of time, which you decide, and it pays your family a lump sum if you die during the term of the plan. It usually costs less because you can claim tax relief on your payments.
To find out more about life insurance, please don’t hesitate to get in touch with us today. We’ll be delighted to help.
All the best,
The Team at Gallivan Financial