What is life insurance?
A life insurance policy provides money for your dependants when you die. As with any financial product, there are several things to consider before you choose your policy. If your children are young, you may need more cover because they will depend on you for longer. You need to purchase enough insurance to:
- Provide an income for your family for as long as they need it
- Clear any loans or mortgage you may have
- Ensure there is money to cover future costs like college for your children
How can I protect my family financially if I die?
Nobody likes to think about the worst happening, but death is a fact of life. It’s a good idea to have a plan in place to protect your loved ones financially in the event of your death.
If you die prematurely, this may have serious financial implications for your family. This could mean a significant reduction in their financial wellbeing because your earned income will stop. Furthermore, inheritance tax could arise depending on what and how much they inherit from you.
There are some social welfare benefits in place to support your family in the event of your death like the widow’s pension, however they will usually only amount to a fraction of your income. These benefit payments are designed to cover only the bare necessities of life. By taking out a life insurance policy, you are ensuring your family’s financial security should the worst happen to you.