Most insurance advisers make it their top priority to convince you that life Insurance is an absolute must.
Before you go out and impulsively put a policy in place you should work out if it's really necessary.
Consider this; would you take out a holiday insurance policy if you weren't going on holiday? No of course you wouldn't.
The answer to this question is clear-cut, everyone knows you don't need insurance for an event that will never occur.
The answer when it comes to taking out Life Insurance is unfortunately not so simple.
By definition you are insuring your life, and this is of course one thing we all have in common.
It is however a misconception that everyone should buy life insurance.
There are circumstances when you don't need life insurance.
The purpose of life cover is to ensure your dependents are able to cope financially if anything should happen to you.
A more suiting name should be "dependents insurance".
Given this definition people with no dependents should question if they actually need life cover at all.
If you do have a family but you are not the breadwinner then perhaps you do not need to take out the cover but instead your spouse should consider a policy.
The easiest scenario to address is someone with no financial dependents and no large debts such as a mortgage.
In this situation there is probably no need to take out a policy.
We have found the biggest cause of confusion is when people with no family take out their first mortgage.
Lenders will often aggressively try to package up term life insurance that lasts the length of the mortgage repayments which is typically twenty-five years.
It's of course in their interest to do so, not only do they do they get commission for putting the policy in place they also guarantee that should anything happen to you they will get their money back.
The policy provides protection for the lender just as much as it does for you.
You need to ask yourself the following question: should anything happen to me do I want to leave my property to someone? If the answer to this is no and money is tight you probably don't need life assurance.
The largest concern when buying life insurance only to repay your mortgage is that the property value drops below the amount outstanding on the mortgage; as then you are in negative equity.
If you were to die and the property was in negative equity the amount still owed to the lender would be taken out of your estate, which is the value of everything you own that then becomes the inheritance of your family.
Remember that debts cannot be inherited, so if the overall value of your estate is negative the debt is simply written off.
Taking out mortgage life insurance might not be a concern because the mortgage amount is only a small percentage of the property value or you are simply not interested in leaving a nest-egg for your family.
This is perfectly understandable if money is tight and you're trying to cut out unnecessary costs.
If you follow the above advice you should be able to avoid the unnecessary expense of getting life cover.
It can be a great purchase providing peace of mind, but remember it is not for everyone.
Before you go out and impulsively put a policy in place you should work out if it's really necessary.
Consider this; would you take out a holiday insurance policy if you weren't going on holiday? No of course you wouldn't.
The answer to this question is clear-cut, everyone knows you don't need insurance for an event that will never occur.
The answer when it comes to taking out Life Insurance is unfortunately not so simple.
By definition you are insuring your life, and this is of course one thing we all have in common.
It is however a misconception that everyone should buy life insurance.
There are circumstances when you don't need life insurance.
The purpose of life cover is to ensure your dependents are able to cope financially if anything should happen to you.
A more suiting name should be "dependents insurance".
Given this definition people with no dependents should question if they actually need life cover at all.
If you do have a family but you are not the breadwinner then perhaps you do not need to take out the cover but instead your spouse should consider a policy.
The easiest scenario to address is someone with no financial dependents and no large debts such as a mortgage.
In this situation there is probably no need to take out a policy.
We have found the biggest cause of confusion is when people with no family take out their first mortgage.
Lenders will often aggressively try to package up term life insurance that lasts the length of the mortgage repayments which is typically twenty-five years.
It's of course in their interest to do so, not only do they do they get commission for putting the policy in place they also guarantee that should anything happen to you they will get their money back.
The policy provides protection for the lender just as much as it does for you.
You need to ask yourself the following question: should anything happen to me do I want to leave my property to someone? If the answer to this is no and money is tight you probably don't need life assurance.
The largest concern when buying life insurance only to repay your mortgage is that the property value drops below the amount outstanding on the mortgage; as then you are in negative equity.
If you were to die and the property was in negative equity the amount still owed to the lender would be taken out of your estate, which is the value of everything you own that then becomes the inheritance of your family.
Remember that debts cannot be inherited, so if the overall value of your estate is negative the debt is simply written off.
Taking out mortgage life insurance might not be a concern because the mortgage amount is only a small percentage of the property value or you are simply not interested in leaving a nest-egg for your family.
This is perfectly understandable if money is tight and you're trying to cut out unnecessary costs.
If you follow the above advice you should be able to avoid the unnecessary expense of getting life cover.
It can be a great purchase providing peace of mind, but remember it is not for everyone.
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