The short answer is NO. Life insurance is not a compulsory insurance policy like the likes of building insurance, car insurance etc. One way to determine whether or not you need life insurance is to consider what your financial obligations and contributions are and what the impact of this would be on your loved ones if you were no longer around. If your outgoings are not mitigated by a death in service policy, saleable assets or an income, investment, savings, or pension plan then you may want to consider a life insurance policy.
Life Insurance is a lump sum of money to pay-out in the event of death or being diagnosed with a terminal illness (anything less than 12 months to live). It is there to offer financial security for your family in the event of your death.
There are a few types on life insurance policies available:
Level Term Policy – This is a fixed lump sum pay-out over a pre-determined amount of time. The advantage of this is that your family will receive a lump sum whether you died a year into the policy or a year before expiry.
Decreasing Term Policy – This a lump sum that will reduce over a pre-determined amount of time to repay a reducing debt. I.e., repayment mortgage.
Whole of Life Policy – This is a fixed sum assured which will pay on your death, there is no pre-determined amount of time the policy will run for. This policy is used to mitigate against any potential inheritance tax liability.
If you’re unsure what policy would suit you best, get in touch and one of our team would be happy to talk you through your options.