If you don’t think you need life insurance or income protection, then think again. Even if you are super healthy and don’t think these covers apply to you, then you may want to rethink.
Here’s a look at what life insurance and income protection is, and why you should seriously consider them, even if you are in the best health.
Life insurance
According to the Money Advice Service, not everyone needs life insurance, but if you have children, a mortgage or others who depend on your income, then yes, you should definitely ensure you are covered with life insurance.
Even if you are healthy, you have no idea when your final day will come. Life is fragile and sadly we don’t know when we will die or how. Even if we are in the ripest of health, a tragic accident could sadly take us away, leaving our loved ones with our mortgage payments, debts and reduced financial stability.
Life insurance protects your life. You can set the level of cover you need to pay off your mortgage and leave enough monthly income until your children are 18, for example.
That’s exactly what my husband and I have done. If one or both of us should die before our children reach adulthood, then the survivor, or our children, will receive enough money from our life insurance to clear the outstanding mortgage and to cover monthly living costs until the children are adults or even older.
Once received, this money can also be used to recoup any funeral costs that loved ones may have to outlay.
Life insurance gives you and your loved ones peace of mind should the worse happen. It means your loved ones and dependents will not be out of pocket or struggling with leftover debts if you are no longer around to financially support them.
Not only this, but if you have a mortgage then it’s often a requirement that you must have a life insurance in place. This offers a guarantee to your lender that the money you have borrowed for your mortgage can be repaid if you die. Therefore, it may be a requirement for you to have life insurance in place when you buy a property, otherwise you are breaking the terms of your mortgage. It’s not uncommon for mortgage lenders to ask for details of your current life insurance.
Here are some of the reasons you might need life insurance, even if you’re healthy:
- Purchasing a new home, with a mortgage – to cover payments or clear the outstanding debt on your death
- Marriage – to leave financial contributions to your spouse on the vent of your death
- You have children or other dependents – to support your children financially should you die
- To cover funeral costs – funerals can cost thousands of pounds and cause financial strain on your loved ones if you don’t leave enough money to cover the costs
Income protection
Whilst you might not die before your time and appear in perfect health, you still never know what is around the corner. An accident and injury could prevent you from working as usual, or even an illness or disease.
Life insurance will provide your family with financial support on the event of your death, but it doesn’t cover illness or injury.
How long could you last financially if you suddenly couldn’t work for several months due to an injury?
What if you became so ill, you couldn’t work?
This is where income protection comes in. Income protection will pay out a percentage of your salary if you are personally signed off work due to illness or injury.
There are different levels of cover available. Some will pay 50% of your salary and others up to 100%. The higher the percentage, the more you can expect to pay in monthly payments.
It doesn’t matter if you are self-employed or employed; it’s an important cover to consider protecting your income if you cannot work due to an injury or illness.
Don’t forget, it’s not just illness this covers, but injury too. It doesn’t matter if you avoid illness and are super healthy… you may still be involved in an accident or even suffer a sports injury that puts you out of action for weeks or even months.
If you have enough savings or financial support from your other half or family should you not be able to work for a prolonged period of time, then you may not need income protection. However, if you have no idea how you would financially cope if you couldn’t work for a few weeks, months or even years, then you need to seriously consider income protection insurance and seek financial advice to choose the right cover for your needs.
Final thoughts
As mentioned, it doesn’t matter how healthy you are, you never know when your last day will be or if you will contract a serious illness or injury leaving you out of action for a considerable time. Unless you have the wealth to cover your outgoings and debts should the unfortunate happen, it is very wise to ensure you and your dependents are protected with a suitable life insurance policy and income protection.
Very good advice and information, thank you. It’s wise to consider these things as early as possible.