Beginners Guide To Life Insurance

Who really needs protection?

“Only two things in life are guaranteed…” A few of us have heard that saying before. In that sense I suppose you could answer all of us need some form of insurance to cover at least the cost of a funeral and we need to know how much this costs. However we normally find that people who have something to leave or someone to leave it to are the most in need of protection. To put it another way – Home-owners and/or those with children are those who are most likely to think about it. Now consider a 30 year old with a 25 year mortgage and 2 children age 1 and 3… And consider the same person 45 years from now – mortgage free with the children all grown up and flown the nest. Arguably both situations require cover but at two very different levels of cover. For the 30 year old the total is far greater than that of the 75 year old – Because circumstances have changed.

The trick to life cover is having the right level of cover in place when you die, now we don’t have a crystal ball so we don’t know when that will be – otherwise we would take cover out the week before right? The only way you can do this is to have regular reviews of your cover to make sure that you have the correct cover in place should the worst happen – Yearly as a worst case scenario. While the example above is extreme ends of the spectrum there are many things that could happen between now and the day you die – Promotion, redundancy, birth of children, marriage, divorce, separation, upsize the house, downsize the house all of which should/could result in a change in protection requirements.

PS: Death and taxes are the only things that are certain according to Benjamin Franklin if you hadn’t heard the saying before…

*Trusts are not regulated by the FCA but can form an integral part of your financial planning – without a will your family could wait up to 12-18 months (!) for the insurance to finally reach them after probate/confirmation (legal process). Talk to us about writing your insurance into trust – it may be the most important thing you do today.