On taking out a mortgage, or increasing their mortgage amount, many people are prompted to take out life insurance to cover the mortgage balance.
Mortgage life cover is certainly important, but if you are taking out a policy for this purpose, you should also think about what additional cover you might need.
If you don’t have a mortgage, then you should still think about this area. Life events that should prompt you to review your life insurance requirements include:
- Purchasing a home, with or without a mortgage
- Entering into a marriage or other significant relationship
- Planning to start a family or to have more children
- A relationship breakdown
- A change in your employment situation, such as leaving a role or receiving a salary increase
- An improvement in your state of health
Depending on your individual circumstances, it can be a good idea to have life insurance for:
- Repaying your mortgage on death
- Providing a sum for your family to replace lost income should you pass away – if you are a family breadwinner, how would your family manage if the worst was to happen and your income was no longer available
- Providing a sum to pay for your funeral expenses – the average cost of a funeral in the UK is more than £4,000, so would this sum be available to your loved ones if they had the unfortunate task of arranging your funeral
- Providing a sum, payable on death, to mitigate inheritance tax liabilities – you should assume that any property and other assets you own over and above a value of £325,000 could be subject to inheritance tax at 40% on your death. Without appropriate life insurance, this could clearly mean that your loved ones would be faced with a significant tax bill were you to pass away
Moneysworth’s highly experienced advisers are available to discuss your life cover needs and to carry out a full assessment of how much insurance you might need. Contact us today to find out what we can offer.