Many people, even if they can afford it, fail to take out life insurance. This could be because they do not stop to consider what it can be used for.
Life insurance pays out a fixed sum when the policyholder dies. Without it, your dependants could struggle financially.
Here are six reasons you’re definitely better off with life insurance:
1. Pay for the funeral
The BBC reported in October 2015 that the average cost of a funeral in the UK is £3,700. For this amount, you get a basic funeral. If you want the remains cremated, then this will cost around £700 extra and a full burial is around £1,600.
2. Pay the children’s education
If you should die before your children’s education is finished, then life insurance can be used for your kids’ education. This could pay private school fees or help support them when at college of university.
The educational organisation The Sutton Trust said April 2016 that the average debt of a graduate student is now £44,000. It would be great to know that if you die, your life insurance could pay off your children’s student debts.
3. Replace you or your partner’s income
Many households are dependent on two incomes to support their lifestyle. If one partner dies, this can mean financial hardship on top of grief. Life insurance can be used to replace a partner’s income.
If there is only one wage earner in the household, then life insurance can be a much-needed income source for your dependants.
4. Pay off debts
The Money Charities’ December 2016 statistics reveal that the average UK household debt is over £26,000, including the mortgage. Life insurance can pay off these debts if an income earner dies.
You can take out life insurance to specifically pay off the mortgage, leaving your dependants’ mortgage free. A life insurance policy type with modest policy payments reduces the amount insured each year to reflect the decreasing outstanding mortgage amount.
5. Pay the inheritance tax
If your estate is worth more than £325,000, then when you die, inheritance tax is payable. This figure of £325,000 may seem a lot, but it includes the value of the family home. With the rising cost of houses, many families’ assets are above this £325,000 threshold.
Life insurance can take care of paying the inheritance tax.
6. Give to charity
Even if you have no dependants, you can still take out life insurance and make a will that leaves the insurance money to your favourite charity or charities.
If you have dependants who are financially secure, then some or all of your life insurance money could be given to a charitable cause.
Life insurance need not be expensive – payments are dependent on the level of cover required – but the best place to buy life insurance is through a broker. Ascot Mortgages has access to a wide range of policies and is here to advise you on the best policy for your needs.
To talk about the value of life insurance, contact us today.