Life insurance is a complex and daunting prospect for many people. With many types and kinds, some wonder if they even need it.
One way of approaching life insurance, and of making a good decision on whether or not you should purchase it, is to consider what will happen and who will be affected after you die. The idea of life insurance is that it will allow those affected by your death to continue to live at roughly the same standard of living they enjoyed when you were alive.
So, if you are single, you may not need it. The same may be true if your partner earns enough for your household to live on. (Even in these cases, though, it is important to make sure you at least have enough set aside to cover the cost of your funeral.)
However, if you have dependents â such as school-age children, or a partner who lives relies on your income, or family members living in a house with a mortgage you pay â itâs probably a good idea to consider life insurance. Your death will be traumatic enough for your relatives â it should not also plunge them into financial turmoil.
Consider whether your partner or family could pay the mortgage or the rent, buy food every week, pay the bills each month or keep the car running. In the event you die, life insurance can pay off mortgages, cover your outstanding debts, cover funeral costs, and even pay to educate your children.
Some might consider relying on the government to take care of their family, but the Money Advise Service points out that âthe money they would get from the state is much lower than youâd probably expect. If you want to provide for your family financially when you die, life insurance is a must.â