Life insurance is one of those things people sort once, file away and never look at again, often when they buy a home or have a baby. Life then changes around it: a bigger mortgage, another child, a new job, and the cover quietly stops matching the need. Two questions are worth revisiting every few years. Do you have enough, and, just as important, does your family even know it exists? Here is how to think it through.
What life insurance is for
At its simplest, life insurance pays out a sum if you die during the policy term, so the people who depend on you are provided for. It is not for you; it is for them. That framing helps when you are deciding how much: the question is what your family would need to stay secure, not what feels like a round number.
The main types, briefly
- Term insurance covers you for a set period, such as until the mortgage is paid or the children are grown. It is usually the most affordable.
- Whole-of-life insurance covers you whenever you die and costs more, and is sometimes used for estate planning.
- Decreasing term is often used to match a repayment mortgage, as the payout falls over time.
Which suits you depends on what you are protecting and for how long, and this is a good area to take regulated advice rather than guessing.
Do you have enough
A sensible review looks at what would need covering if you were not here: the mortgage and debts, the cost of raising children, replacing lost income and any final expenses. Compare that with your current cover and any death-in-service benefit from your employer, which people often forget to count. If there is a gap, that is the conversation to have with an adviser.
The part people miss: does your family know?
A policy your family cannot find is a policy that may never pay out when it is needed. Make sure your partner or executor knows the cover exists, who the insurer is and where the paperwork lives. Check the beneficiaries too, especially after a marriage, divorce or new child, as they do not update themselves. This is exactly the kind of thing FamilySafe keeps in one place, so the cover you paid for actually reaches the people it was meant for.
Frequently asked questions
How much life insurance do I need?
Enough to cover what your family would need without your income: the mortgage and debts, the cost of raising any children and replacing lost earnings. Count any employer death-in-service cover too. An adviser can help you size it properly.
Should I get advice?
For anything beyond a simple policy, yes. The type and amount of cover, and how it fits with your wider finances, is an area where regulated advice is worth the cost.
Why does my family need to know about it?
Because a policy they cannot find may never be claimed. Make sure your partner or executor knows it exists, who the insurer is and where the documents are, and keep the beneficiaries up to date.
Sources
- MoneyHelper: Life insurance guidance
- Association of British Insurers consumer information
