Who needs life insurance?

Do I need life insurance?

Before taking out a new life insurance policy, it’s important to understand whether you and your family will benefit.

Life insurance is intended to support your family and loved ones if you die unexpectedly. It pays out a fixed sum (called a ‘benefit’) to your chosen beneficiaries after you pass away. This can help to cover the cost of unpaid loans, funeral costs and other expenses. In return, you will be expected to pay a monthly or annual sum throughout your life (called a ‘premium’) in order to stay insured.

Life insurance offers peace of mind, knowing that if you die unexpectedly your family and loved ones will not have to suffer financially.

If you have already amassed a lot of wealth throughout your life, paid off your loans and mortgage, and do not have any financial dependents, there may be no need to leave a little extra behind after you’re gone.

There are also certain terms that may affect your eligibility to take out life insurance.

Life insurance can be a big financial commitment. You will need to continue to pay your premiums throughout your life, and there is no guarantee of a pay-out. If you outlive the lifespan of your policy, or if you stop paying your premiums before your death, your family will not receive a benefit.

Before taking out life insurance, it’s important to understand if it’s right for you, and whether the benefits will out-weigh the financial commitment you take on while still alive.

With that said, here are some examples of when life insurance could benefit you and your family, and when you should consider taking out a life insurance policy.

Who needs life insurance?

1/ You are thinking of starting a family

If you are married, or thinking of getting married, or if you are in a long-term relationship or civil partnership, it’s common for both partners to take out a separate life insurance policy with the other partner as a named beneficiary.

This is especially important if you and your partner share financial commitments, such as a joint mortgage or joint investments.

In the case that one partner passes away, the other partner will be able to cover everything from the cost of funeral expenses, to ongoing financial commitments and the cost of living.

Furthermore, if you and your partner are considering having children or adopting, it’s important to make sure that you have considered the impact your death would have on the family. Have you thought about the cost of childcare, school fees and your childrens’ medical bills?

As a new parent, it’s absolutely essential you are able to support your family financially, even if you are gone. Many people take out their first life insurance policy when they become new parents for this very reason.

2/ You have a mortgage

One of the most common reasons to take out life insurance is to cover the cost of your mortgage. In fact, many mortgage lenders will require you to take out a life insurance policy when you apply for a mortgage.

By taking out a life insurance policy, you ensure that – if you pass away before your mortgage is paid off – your cash benefit can be used to pay off the remaining value of your debt. This means that your family or beneficiaries will inherit your home as part of your estate.

If you have a mortgage, and you pass away without having taken out life insurance, your lender may repossess your property. This could leave your family without a home after you’ve gone, or it could leave your partner paying the full cost of the mortgage repayments on a single income.

3/ You have other unpaid debts

A mortgage is not the only type of loan that life insurance can help to cover.

Your benefit can also help to cover the cost of unpaid loans such as credit card bills, items bought using retail finance, personal and business loans, vehicle finance and student loans.

If you pass away with outstanding debt against your name, your spouse or family may inherit these debts. That can leave your family and loved ones facing unexpected costs after you’ve passed away.

If your family is unable to cover the cost of these debts, they may need to offer assets from your estate instead. This could include your valuables, vehicle or items from your home such as furniture and electronics.

If your family depends on these items, it can leave a sizable hole in both their finances and their quality of life.

Therefore, if you have taken out loans during your life, you should consider taking out life insurance to ensure your family and loved ones will not be left managing your debts if you pass away unexpectedly.

4/ You are a divorced or single parent

If you have a child with a previous partner, it’s important to consider the financial wellbeing of that child should the worst happen.

Whether or not you remain the primary caregiver, life insurance can help to ensure that your child or children will have a stable financial future in the event of your death.

Your life insurance benefit can help to ensure that either your former partner or your children’s godparents have enough to cover the cost of their upbringing.

You could also consider putting your life insurance benefit into a trust fund, so that your child or children will receive the benefit when they reach 18 years old. This can help to ensure they have enough money to attend further education, start a business or put a deposit on their first home.

In any case, life insurance can help to ensure that, even when you’re gone, your children’s financial interests are secured.

5/ You are a business owner

If you own or manage a business, or if you are a major shareholder, you should consider taking out life insurance as a way to protect your interests if you pass away unexpectedly.

This is especially important if you run the business as a partnership with another business owner. In these situations, it is common for both parties to take out a life insurance naming the other partner as a beneficiary. This is because, when you pass away, your partner will inherit all responsibilities within the business, including any debt that the business has accrued.

When taking out a life insurance policy, you may wish to name your business partner as the beneficiary, helping to ensure that in the immediate aftermath of your death your business will have the necessary funds to continue operations.

Your life insurance benefit can help to pay your employees, provide recruitment fees to fill your position within the company, and settle any unpaid debts.

If you’re worried that your business will absorb the lion’s share of your life insurance benefit, leaving your family with nothing, remember that you can name your loved ones as the beneficiaries of your shares in your will. This will help to ensure that their financial interests will be protected too.

6/ You want to leave a legacy

The final reason to consider life insurance is if you wish to leave behind a lump sum for people to remember you by. Your life insurance benefit can help to improve the lives of the people you name as your beneficiaries after you’re gone. This is usually your family, however you are free to choose whoever you wish as the recipient of your benefit.

Some people choose to name their favourite charity as the recipient of their life insurance benefit. Others choose to donate their benefit to a local cause, such as the benefit of a nearby school or sports club.

For others, it’s all about leaving money behind for their children. Your life insurance benefit could help your children to go to university, get married, start a family of their own, or buy the things they need such as a house or car.

With your life insurance benefit, you can improve the lives of the people around you and ensure they remember you fondly after you’re gone.

7/ You have a bucket list

One of the benefits of international life insurance from William Russell is that, if you are diagnosed with a terminal condition with less than 12 months to live, you will have the option to take your life insurance benefit early.

This means you can spend the final months of your life ticking off all those once-in-a-lifetime things you’ve always wanted to do, with your family and loved ones by your side. You can go on a life-changing holiday, eat all the foods you never got to try, and experience everything you’ve always wanted to do, without having to worry about the financial impact.

By taking your life insurance benefit early, you can ensure you leave your family with nothing but happy memories of your time together.

Do you need life insurance as an expat?

Another time you should think about taking out life insurance is if you are moving to or living in another country.

Becoming an expat is an incredible experience but it comes with many challenges. One of those challenges is protecting your life and your family’s wellbeing while living and working abroad.

If you pass away in a foreign country, it’s important to make sure your family and loved ones will be supported after you’re gone.

They may need to pay more to cover your funeral expenses and settle your estate. What’s more, your family may struggle to cope financially without your income to support them, especially if they are living abroad. School fees, medical bills, an international mortgage and the general cost of living could put your family into financial hardship.

International life insurance is tailor-made for expats. It offers worldwide coverage, so no matter where you live and work, you will be covered. Should you pass away while living abroad, your family and loved ones can receive up to US$2 million in benefits, plus an additional US$500,000 available from optional accident insurance.

Notes on our life plans

We show the benefits on this webpage in US dollars, but we can also denominate your policy in pounds sterling or Euros. You won’t find complete information for our plans on this webpage, nor the full T&Cs, limitations, and exclusions that would apply if you purchase a life insurance policy. You can find complete information in the plan agreement, which we suggest you read together with this webpage. We work hard to ensure the information we provide on this webpage is accurate and up-to-date, but inaccuracies are possible. We rectify errors as soon as we become aware of them. The T&Cs that apply to your policy are those found in your plan agreement.