Life Insurance, otherwise known as Life Cover, is designed to protect families from financial difficulties caused by a loss of income due to death. If one of the working adults in your family were to die, would you still be able to afford the mortgage? What about other living expenses and debts? Do you have savings to fall back on? If you had to use your savings to pay the mortgage, how would that affect your future plans?
Losing an income suddenly could have devastating consequences for your family. Unfortunately, mortgage lenders and utility companies don’t offer much sympathy when it comes to keeping up your payments – if you can’t afford your home or utilities, you can’t have them. Families who haven’t taken out Life Insurance often have to sell their family home, downsize and accept a lower of quality of life. Debts can start to stack up, leading to more problems down the road, and savings can disappear almost overnight. Without Life Insurance, the loss of an income due to death could irreversibly damage your family’s future.
As mortgage brokers, it is our duty to ensure our customers are aware of the consequences of not protecting their mortgage with Life Insurance. We provide a free insurance advisory service to help you find and apply for the right policy, and you can book your FREE insurance consultation here. In this guide, we’ll discuss 3 reasons to take out Life Insurance, how Life Cover policies work and when you should get one.
3 Reasons to Get Life Insurance
1. To protect your family home
If part or all of your family’s future income was lost due to death, you may struggle to continue paying off your mortgage. This could mean selling the family home and downsizing or renting. With Life Insurance, your family could use part or all of the payout to pay off the mortgage so they own the home outright – helping to secure their future and make life more manageable financially and emotionally.
2. To protect your family’s quality of life
Without Life Insurance, your family may have to use its remaining income or benefits to cover mortgage repayments or rent, debts, and other living expenses. This could put a financial stranglehold on your family, leaving less money for holidays, hobbies, education or quality time with your children. Covering these expenses with your Life Insurance payout could give your family greater financial freedom, helping to protect their quality of life.
3. To protect your family’s savings & future
Some people don’t get Life Insurance because they have savings to fall back on, but we believe this can be a mistake. If you have enough savings to cover your mortgage, debts and living expenses, then think of Life Insurance as protecting your savings. You likely have a vision for you or your family’s future which relies on that money – be it a bigger house, a holiday home or a comfortable lifestyle in retirement. A loss of income due to death could put financial strain on your family for many years and make those luxuries unattainable. Protecting your savings with Life Insurance can protect your vision for a brighter future.
How Does Life Insurance Work?
If the policy holder dies or gets diagnosed with a terminal illness with less than 12 months to live, a lump sum is paid out to the surviving family members. If you have joint Life Insurance with your partner, the policy will payout if either policyholder dies or is diagnosed with a terminal illness. There are two types of Life Insurance; ‘Level Term Assurance’ pays a pre-decided, fixed lump sum no matter how long into the policy a claim is made, and ‘Decreasing Term Assurance’ pays a decreasing lump sum the further you are into your policy (essentially mirroring the decreasing amount you’ll owe on your mortgage). To learn more about the different types of Life Insurance and which type is right for you, please read out guide, ‘What Life Insurance Should I Get?’
When Should I Get Life Insurance?
Life Insurance may not be something you’ll need to have for life. It’s most common to take out Life Insurance when you have children or a partner who depend on your income to pay the mortgage and other bills. For example, if you’ve bought a house and had a child, you may want to take out a policy that will last until you retire or until your children are of working age, with a large enough payout to pay off the mortgage and cover living expenses. This way, you are protecting your family’s home and quality of life, both of which depend on your future earnings.
The Bottom Line
If you have children or a partner who is dependent on your income, you should consider getting Life Insurance. If two families, one with Life Insurance and one without, lost a working parent, their long-term outcomes will likely be very different. The one with insurance may be able to pay off their mortgage instantly and own their family home outright. If their payout is large enough, they may also be able to cover living expenses until the children are of working age. This could mean they own a valuable asset and have the financial freedom to fund holidays, hobbies and education – protecting their quality of life long into the future.
The family without Life Insurance may have to sell the family home and downsize or rent. This could reduce their assets for the future, and any remaining income or benefits may have to be used to pay the bills or rent – potentially leaving no money left to enjoy life. Life Insurance can essentially insure your family’s future quality of life, which we believe is one of the most important things you can insure.
At Michael Usher Mortgage Services, we’ve been helping people with insurance for over 30 years. We have a dedicated insurance and protection team who can help you FREE OF CHARGE. That’s right, our friendly experts will find the right policy for you and set it up for you for free. We understand the potentially devastating consequences of not having Life Insurance, which is why we do all we can to protect our customers and their families.
Book your FREE insurance consultation with one of our advisors to get going quickly. We have offices in Frimley and Basingstoke, or we can help you remotely via phone or video call if you would prefer. We look forward to chatting with you!
Book your FREE insurance consultation here
Think carefully before securing any other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage.
