LifeFinancial
Not everyone needs life insurance (also known as life cover and death cover). But if your children, partner or other relatives depend on your income to cover the mortgage or other living expenses, then the answer is yes – you probably do want life insurance, since it will help provide for your family in the event of your death.

What is life insurance?

Life insurance can pay your dependents money as a lump sum or as regular payments if you die. It’s designed to provide you with the reassurance that your dependents will be looked after if you’re no longer there to provide.The amount of money paid out depends on the level of cover you buy. You decide how it is paid out and whether it will cover specific payments, such as mortgage or rent. You may need to think about whether receiving a payout will affect any means tested benefits your dependents might otherwise be eligible for.There are two main types of life insurance:
  • Term life insurance policies: run for a fixed period of time (known as the ‘term’ of your policy) – such as 5, 10 or 25 years. These kinds of policies only pay out if you die during the policy. There’s no lump sum payable at the end of the policy term
  • A whole-of-life policy: will pay out no matter when you die, as long as you keep up with your premium payments

Do you need life insurance?

If you have:
  • dependants, e.g. school age children
  • a partner who relies on your income, or
  • a family living in a house with a mortgage that you pay – a life insurance policy can provide for them if you die. You might also want a policy which covers your funeral expenses. If you want to provide for your family financially if you die, think about getting life insurance

What isn’t covered?

Life insurance usually only covers death – if you can’t provide for your family because of illness or disability, you won’t be covered.Some life insurance policies provide a terminal benefit, although these are not automatically granted.A terminal benefit will pay out on diagnosis of a terminal illness. Check the terms and conditions of your policy to see if you’re covered. Most policies have some exclusions (things they don’t cover). For example, they might not pay out if you die due to drug or alcohol abuse, and you normally have to pay extra to be covered when you take part in risky sports.If you have a serious health problem when you take out the policy, your insurance might exclude any cause of death related to that illness. You can buy other insurance products for these issues, which cover:
  • long-term illness
  • critical illness cover, or
  • total and permanent disability

Who doesn’t need it?

You may not need life insurance if:
  • you’re single
  • your partner earns enough for your family to live on
  • you’re on a low income and could be eligible for state benefits
If you’re not sure, get financial advice.This guide is intended as guidance only, and is not financial advice. For financial advice please speak to a qualified adviser. Ammonite is an appointed representative of Julian Harris Financial Consultants Ltd, which is authorised and regulated by the Financial Conduct Authority.
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