When Should I Get Life Insurance?
If you’re considering life insurance, a common question is “When should I get it?” There are several life stages when purchasing coverage is often advisable. Read on as we outline key times when life insurance makes sense for UK residents.
When Starting a Family
Once you have a spouse, partner or children depending on your income, life insurance provides essential financial protection for your loved ones. A payout can help with daily expenses, final costs and repaying debts if the worst were to happen. Even if you don’t have kids yet, life insurance gives newlyweds or partners peace of mind. A term policy with 10-20 years of coverage works well for starting families.
When Buying a Home
Purchasing your first home is a major financial commitment. With a mortgage to repay, life insurance ensures your family can keep the home if you were to pass away prematurely. A decreasing term policy with a payout matching your outstanding mortgage balance is an ideal complement to a new house purchase. This offers affordability while fully covering the mortgage.
When Household Income Increases
Have you recently gotten a pay raise, taken a higher paying job, or added a second income through a spouse or partner’s career? If your household income has increased noticeably, re-evaluating life insurance coverage is wise. The higher income likely increases the amount needed to maintain your lifestyle. Also consider contributing more to savings or retirement accounts, which life insurance proceeds can help replace and protect.
When Starting a Business
Business owners should make life insurance a priority. Having coverage that pays to co-owners or heirs keeps the business running in your absence. It provides continuity and stability during the transition. Life insurance also covers losses if a key employee dies. Work with an adviser to project needs based on potential lost revenue and replacement costs.
When Taking Out Large Loans
Whether it’s a business loan, student loan or home equity line of credit, large debts obligate you to repayment even if your income were to cease. Purchasing a life insurance policy with a benefit adequate to cover the full outstanding loan balance means lenders get repaid and your family avoids burden. It’s also wise if co-signing a loan for another person.
When Income Earners Retire
As you prepare to leave the workforce and rely on retirement savings and pensions, life insurance provides reassurance for covered spouses. It ensures financial stability for a surviving partner if one were pass away during the retirement years. Full retirement marks the stage to switch from term to permanent life insurance policies.
Major life milestones tend to create the largest insurance needs based on new debts, income sources and family dependencies. Use these common trigger moments as a guide for when to re-evaluate existing coverage or seek out new life insurance policies over your lifetime. The right planning ensures your family is protected.