Eleven key times in your life you need to start thinking about life cover:
1. You buy your first home with a partner. I think many of you are pretty switched on to the need to buy life cover when you first take out a mortgage. If you are buying a home with someone else you need enough protection in place to make sure he or she won’t be saddled with the entire mortgage debt if the worst happens to you.
2. You have other debts and dependants. So you got your mortgage covered but what about other debts such as Personal loans and Credit cards’ balances? Make sure you take out enough insurance to cover these too, because these debts have to be paid out of your estate. You don’t want to leave your debts behind for your family to deal with.
3. You get married or enter into a civil partnership. Not only are you sharing each others lives, but you are now probably sharing each others finances too. You and your partner are bound to depend on some of each others’ salary to pay your living expenses. That means you’ll need enough life insurance to cover the costs of your contributions to the home.
4. You start a family. Bringing up a child can cost a small fortune and it can be a pretty big drain on both parents’ income. If one income is lost, you’ll need enough protection in place so the surviving partner can continue to support the family financially.
5. You become a stay-at-home parent. You may think there is no need to buy life insurance- for a parent who has given up work to bring up a child. But, you would be wrong! When you set up a policy, think about covering the costs of childcare, and running a home in the absence of the stay-at-home parent. These expenses may run far higher then you may expect, so having extra protection to cover them can be really valuable.
6. You have more children. Quite simply, remember to start stepping up the amount of protection you have, as your family grows.
7. You move into a bigger house. Bigger homes normally mean bigger mortgages, so make a point of increasing your life cover when you move to a larger property.
8. Your salary increases. You have just had a big pay rise. Congratulations! This could be your ticket to a larger home, in a more affluent area, or private education for your children. In other words, if you start enjoying a more affluent lifestyle, think about upgrading your life insurance, to help your family support it if you are no longer around.
9. You change your job. If you are lucky, your employer may offer death-in-service benefits. This could provide a valuable lump sum of say, three or four times your salary. Although that sounds pretty generous, death-in-service may not be enough to cover all your protection needs on its own. Don’t forget death-in-service benefits can’t be adapted to suit your changing circumstances. And most importantly, you’ll lose the cover if you leave your job, unless its available in your new position.
10. You reach retirement. Once you stop working, the time has finally come to start thinking about estate duty. But you can buy an insurance policy specifically to cover these costs. Estate planning can be very complex, so make sure you seek some expert advice from a advisor who specializes in this area.
11. You rely on someone else to support you. If someone else supports you, or provides care for you, think about taking out a life insurance policy to insure their life. Suppose one of your children looks after you if you become unable to do so, if the worst was to happen to them, where would this leave you? You can, in theory, insure anyone else**- as long as there is an “insurable interest.“ In other words, you must have a genuine reason for insuring their life, and there is evidence that their death would have a negative impact on you financially.