Common reasons for taking out life insurance
Buying a home
Whilst it’s not compulsory to take out life insurance when you get a mortgage, it is recommended. If your mortgage isn’t fully repaid when you die, your loved ones will have to make the repayments. A mortgage is likely to be the largest debt you’ll leave behind but it can be covered with life insurance.
If you have mortgage, you might want to consider taking out a decreasing term life insurance policy. As the name suggests, the payout decreases over time so this type of policy is designed to run alongside large debts. If you’ve worked out that it’s going to take you 15 years to pay off your mortgage, you could take out a decreasing term policy for 15 years so if you die during that time, your mortgage will be completely paid off.
If you and your partner have just got married and you’re joining families and assets, you might want to consider taking out either a joint life insurance policy or individual life insurance policies. Joint life insurance ensures that you’re both covered under the same policy, however, it only pays out once, so in the event of a death, the survivor will be left with no cover. A joint policy might be cheaper than taking out two individual policies but should the relationship break down, it can’t be divided so you’d have to cancel it. Also, if you were to then take out an individual life insurance policy, it would cost you more because premiums increase with age.
Starting a family
You should consider taking out a life insurance policy when you start a family. If you were to die, a life insurance payout could provide for them when you no longer can.
Life insurance isn’t just for people who are married and have children. Life insurance is most commonly taken out to cover mortgage debts, so if you’re single and have a mortgage, you should definitely consider taking out a policy. Any outstanding debt you have when you die has to be repaid so if you have a loan or credit card debt, you should also consider getting life insurance to ensure that the debts are paid off. If you don’t have a life insurance policy in place when you die, the money will be collected from your estate. A life insurance policy could also cover the cost of your funeral so your family don’t have to worry about paying for it in the event of your death.
Whilst it’s recommended to take out a policy when you’re young, there is no maximum or minimum age limit for taking out life insurance, however, you do need to be 18 to take out a financial contract such as an insurance policy. You should be able to get some form of cover up until the age of about 90 and you can take out a specific over 50s policy.
Not all life insurance claims are accepted. There are a number of reasons why an insurance provider could reject a claim.