Updated: November 12, 2019

Is Life Insurance Worth It?

Do you need life insurane? Find out whether someone with your needs and circumstances could benefit from it in this guide

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: November 12, 2019

We all insure our cars and make sure we have home insurance on the basis that something ‘might’ happen – somebody ‘might’ bump into us when we’re driving to work or the washing machine ‘might’ flood the kitchen. Whether the insurance is worth it or not may make us change provider but we’ll still make sure it’s in place.

Interestingly, when we ask ourselves ‘Is it worth getting life insurance?’, despite the fact it provides coverage for an event that will definitely happen at some point – a case of ‘when’ rather than ‘might’ – too many of us reach the conclusion that, actually, ‘no, it isn’t’.

There could be a variety of reasons as to why this is the case, usually based upon:

  • An assumption that it will be expensive
  • Other priorities
  • Unsure which type of life insurance would be best
  • Feel like they don’t need it

Whilst there’s an argument that we should all have some form of cover, it’s quite possible one reason why some of us don’t is because the benefits of life insurance aren’t always completely clear.

This article looks more closely at the main advantages and disadvantages of life insurance to provide further clarity as to why some form of cover is a very rational thing to have, regardless of your personal situation.

What are the advantages and disadvantages of life insurance?

Let’s kick things off with a look at the main pros and cons of life insurance…

Advantages of life insurance

The primary benefits of a life insurance policy are:

  • Peace of mind – The inevitability of our own mortality might not fill us with enthusiasm but it’s reassuring to have the peace of mind that, when the time comes, we’ve done all we could to make sure that those we leave behind are financially protected.
  • Family security – No amount of money will ever be able to replace the loss of a loved one. Life insurance is not designed to replace ‘you’ but it can replace your income or pay off debts that would otherwise be inherited by your family.
  • Clearing outstanding debts – In addition to providing a means to replace your income you can also arrange for a life insurance policy to provide sufficient benefits to ensure all outstanding debts –  not just the mortgage – are cleared in the event of your death.
  • Tax-free lump sum – Lump sum benefits received from a life insurance policy are typically free of any income or capital gains tax.
  • Covering funeral costs – Funerals are an ‘immediate’ cost, usually in the thousands, coming at a time when your family’s grief will be quite raw. Arranging for sufficient funds to be available to meet these costs through appropriate life cover provision removes an unnecessary worry.
  • Affordable premiums – Contrary to the belief that life insurance is quite costly, premiums actually can be relatively inexpensive. Depending on how much cover you need and the type of policy you choose, premiums can start from just a few pounds each month.

Disadvantages of life insurance

The main drawbacks of life insurance tend to be:

  • Certain policies can be expensive – If your life insurance needs require a large sum assured in order to provide sufficient cover or you have had health issues in the past, the premiums may begin to look quite expensive depending on the type of policy you have chosen.
  • No return on premiums – The most inexpensive form of life cover is typically fixed-term insurance. However, policies of this nature tend to be ‘pure cover’ which means that once the term reaches its conclusion the policy simply stops and the cover will cease.
    Whole of life insurance does offer the opportunity of a return on your premiums, however, the cost of life cover is usually more expensive than fixed-term plans.
  • Inflexible and confusing – Unless it is a specialised type of policy, most life insurance plans lack any real portability, therefore, if your needs change you can’t simply switch from one type of plan to another without having to undergo a fresh application and underwriting procedure.
    Some insurance plans can also try to include lots of extra benefits which may sound great but can lead to confusion as to what exactly you’re covered for.

There’s no doubt life insurance has some clear advantages and a few disadvantages that are difficult to ignore.

A lot of people find that speaking with a life insurance expert can remove any problems or misunderstanding of life insurance that may exist and provide the transparency they need to help them make a decision.

This is where we can help. The advisors we work with have a wealth of experience across the UK life insurance market and can help you find the best type of life policy to suit your needs.

If you get in touch we can arrange for an expert to contact you directly.

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Is it worth having life insurance if I’m retired?

Yes, it’s certainly something you should consider. Whilst there may be no real need for significant levels of life cover to replace your income if your children are no longer financially dependent upon you, there may still be a requirement to cover other things such as funeral costs.

Also, if your estate is above the inheritance tax (IHT) threshold, many retired people consider using the benefits from a whole of life insurance plan in order to cover any potential liability

If you make an enquiry we can arrange for a specialist to speak with you about this directly.

What are the benefits of having life insurance for young people?

It’s not unusual to wonder what is the benefit of life insurance if you’re young, free and single. However, even at this stage of your life, the unexpected could still happen and, rather like for retired people, it could still make sense to ensure you have adequate provision to cover funeral expenses.

It may also be prudent to give some thought for your future life plans, particularly if you’re in a steady relationship which could blossom into marriage and a family.

Certain types of life insurance policies, such as convertible term insurance for example, allow you to change and extend the term of the plan, therefore, you could take out life cover with a view of reviewing at a later date when your needs may change.

Get in touch for a free, no-obligation chat. We’ll introduce you to one of the expert advisors we work with who can explain all of this and find a life insurance policy to suit your needs.

Is life insurance worth it if I’m planning to leave the UK to work abroad at some point?

It’s more often than not worth considering, particularly if there’s a clear need for life cover right now.

The criteria for whether a policy will still cover you if you move to a foreign country will vary depending on the provider as well as which country you intend to go to. If your plans change you’ll have the peace of mind knowing you have life insurance already in place.

If you make an enquiry we can arrange for an advisor we work alongside to discuss with you what UK insurers terms and conditions are regarding life insurance cover whilst abroad.

Speak to an expert

Having read the details above, if you’re now convinced that life insurance is most definitely ‘worth it’ and would like to speak with an expert to find out more, call 0808 189 0463 or make a quick online enquiry.

We’ll match you with an expert who can answer your questions and find you the right level of cover for the best available price using their extensive knowledge and experience of the entire market.

Ask A Quick Question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in life insurance. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

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FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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