There are several factors that determine the cost of life insurance, but generally, the younger and healthier you are when you buy a policy, the cheaper it will be unless there is some other lifestyle factor that means your policy will be more expensive. You may not be thinking about it in your 20s, but perhaps you should consider if that is the right time to investigate it, for a number of reasons.
Getting married or cohabiting
Whether they have an independent income or not, having a life insurance policy in place assures they can maintain their standard of living if you die prematurely. It will also mean that any shared mortgages or other household costs can be covered. If your partner relies on your income for your joint lifestyle then life insurance is certainly a good idea.
Starting a family
If you’re planning to have a baby in the next year or so, then planning your life insurance requirements now is a good idea. If you’re going from two incomes to one for a period of time then you will need to be clear about what expenses would need to be covered if you were no longer ther to provide an income.
According to a survey by the TUC, published in June 2019, the average UK household has debts of £15,400 in addition to their mortgage. The level of unsecured debt as a share of household income is now 30.4%, the highest level it has ever been. This includes bank overdrafts, personal loans, store cards, and outstanding credit card debts. At least some of these debts may not be written off if you were to die early, leaving your loved ones with a problem to deal with at the time the are least able to handle it. When planning life insurance be sure to allow for settling these debts.
The insurance requirements for those who are self employed can be a specific problem, and one we will return to in a future blog. For now though it is worth keeping in mind that where you may have been used to having life insurance as a benefit form your employer, once you are working for yourself this will no longer be there. With the rise in self employment and fixed term contracts many people who had the benefit before may not have considered the impact of different ways of working.
Your hobbies may also mean you have to think about your requirements for life insurance. Rock climbing, some water or motor sports may carry an increased premium but as the chances of you dying as a result of them is higher so life insurance may well be worth considering. If your job involves something other than sitting at a desk then again you may find the premiums higher, but the risks of not being covered also greater. Please get in touch to discuss your personal circumstances and I will be happy to advise.
“Life insurance with no investment link will have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.”