Life Insurance – while not everybody has it, those who do generally have cover to ‘pay off the mortgage’ or ‘leave something to the kids’ should they prematurely die.
However, Life Insurance provides more than just a debt repayment, or bequest facility. Life Insurance ensures your family is able to maintain their lifestyle in the event you are no longer there earning an income and contributing to the family’s costs.
And if you add up how much income the family would potentially lose, it is often a lot more than the level of cover most people have.
So, what can life insurance buy your family?
Peace of mind
In the event of your premature death, your family immediately loses your income – which they are likely to be relying on to pay bills and meet lifestyle costs. Having cover in place means your family has the peace of mind that, in the event of something happening to you, they will still be financially OK.
Freedom of choice
Having a lump sum available means that your family or surviving partner has the ability to make choices that suit them, rather than having to decide because of financial considerations.
For example, if your family can’t meet the mortgage payments, they may have to sell and move to a different area, away from schools and friends. Having cover in place to either repay the mortgage in full or meet the payments for a specified period of time, means that they have the freedom of choice to stay put or move.
Time for grief
Grief is different for everyone. While one person may want to keep working through that period, another may feel the need to take time out.
Having some funds available to replace income for a specified period of time (two years, for example), means that the surviving spouse can grieve in their own way, and not feel pressured to have to return to work – or find work if they were not working.
A lifestyle for your family
Lifestyle isn’t just about paying the mortgage and bills. What do you and your partner or family enjoy doing? What hobbies or sporting activities do your children have that you’d like them to be able to keep doing, even if your income has stopped?
By provisioning some additional funds for lifestyle needs, your family can maintain their lifestyle, with less stress and change in the event of your premature death. And remember: even if you’re not the main income earner (or maybe not earning any income at all), your contribution to the house has a quantifiable financial benefit, which needs to be considered.
An Adviser Disclosure Statement is available free and upon request.