There are many people that have life insurance but also quite a few people that do not have it. This is something which is often a personal choice and you may wonder whether it is worth doing it. You may have had a salesperson on the phone trying to convince you or perhaps you are already paying in but wonder if it worth it or not. It is good to think about it hard as it can cost a fair bit of money.
You may Have to Have it
It is worth checking to make sure that you do not have to have insurance cover. There are some circumstances where you do need to have the cover. This includes when you have a mortgage, the lender will want you to take out insurance cover which will repay the mortgage if you die before the mortgage has ended. You will be contractually obliged to have it. However, most life insurance policies are not necessary.
Who Will Benefit?
It is worth thinking about how will benefit from any insurance that you take out. It is likely that you are thinking about it because you have family that you want to make sure are taken care of financially. It could be a spouse or children. Just consider carefully who it is that you are hoping will be able to benefit. The reason for considering this is so that you can think about whether they will really need the money or not. Obviously it is lovely to be able to look after people but you need to remember that you could potentially be paying into this insurance for a long time and so you may be able to benefit them more by not paying into the insurance and spending the money on them now.
How Much Will They Benefit?
It is important to also think about how much they will benefit. The amount of money they get is something that you should find out from the insurer. This will help you to think about whether this sum will really make a big difference to them. Consider whether it is worth all of the payments that you are making for the amount that they will get out of it. It could be worth putting that money into a savings account instead, as they could end up with a lot more money that way. It is also worth considering whether that much will really make a significant difference or whether it will just be a small help and will not last very long. It might be better to just enjoy the money with them or save it up rather than paying it to an insurance company. Of course, you will want to make sure that they are able to pay any costs that might arise as a result of you passing away, such as funeral costs and perhaps repaying loans and things like that.
Is There an Alternative?
As mentioned, it could be better to build up some savings instead. You may be tempted t spend them though, but if you have a special or perhaps put it into accounts for your beneficiaries instead – directly into accounts in their names, then you will not be able to spend it. Setting up a regular and automatic transfer can help to make sure that you will remember to do this.
Another alternative is to not have the insurance at all. Consider the age of your family and whether they will be able to manage. As children get older, they will be able to earn money for themselves too so they may not need the financial help. If you are worried about funeral costs, then you can prepay for a funeral and this could be an alternative to having insurance to cover these costs.