Life Assurance is used primarily to provide money for those who may be financially dependent on you, such as family and business partners, should anything happen to you.
Even if there are no dependants who may be financially disadvantaged by your death, life insurance could go towards covering funeral costs.
The following are all situations that may require the use of life assurance:
- Mortgage. If the house is to be lived in by your partner or children then it is normal practice to ensure that the mortgage is cleared on death.
- Money for dependants. If you have financially dependent children then money will help provide for them, perhaps by allowing the surviving partner to stay at home or work part time for some years.
- Business debts. Banks and creditors are cautious when key business professionals are no longer around. Credit lines get shortened or even pulled, often with fatal consequences for the business. If you are a key person your business could insure you to provide cash flow to settle all debts and recruit a new person.
- Business partners and co-directors. If you die you hope that your colleagues will pay a fair value for your share of the business, but they can only do this if the funds are available. Assurance can be used to provide this.
The good news is that many people already have some life insurance and in many cases this will suffice for their needs, although as needs and circumstances change, it may need updating.
If you are a member of a company pension scheme, read your benefits booklet. You may well find that if you die your spouse and/or children will get a lump sum and/or a pension. If you provide us with the details we can calculate the benefits and make sure that they will be sufficient. One problem with older schemes is that unmarried partners are not always treated as a spouse.
You have probably already got life insurance to cover your mortgage, but it would be worth checking that the current level of cover is sufficient for your current needs and situation.
If you are not in a company pension scheme and are self-employed or in business, and have dependants, then it is essential that you have your position assessed. We can help you do this.