Why do you need life assurance?

By guest writer Graham Turnbull

The title of this article is a very good question, and one I used to hear many times as a Financial Advisor of some 15 years. Many of us have a real aversion to the thought that we may leave this place prematurely, which is a completely natural way to think.

There are however some really good reasons why you should consider the benefits that life assurance can provide, but only if you have a genuine need for it.

What is a genuine need for life cover?

Let me give you an example to illustrate my point here. Let’s assume I am 18 years of age living with my parents. I have no debts and earn a small wage working out of the local garage repairing cars.

Do I need any life assurance?

You guessed right, of course not. With no debts or significant monetary impacts should I die prematurely, the ‘need’ here is minimal.

So, when do I need life assurance?

Now, let’s suppose I am a married father of two small children aged 4 & 5 years. My wife doesn’t work and looks after our children. I have a mortgage, a small personal loan and a host of living expenses. I work with a small local business of just 4 employees repairing electrical equipment. They do not offer any benefits other than my monthly pay-packet and I currently do not have any life protection policies other than what is covering my mortgage.

Now, let’s imagine I am no longer here…

Do I need life assurance?

The answer is, of course, yes. Even though the mortgage commitment (which is typically the largest debt anyone will have) is covered by a policy and will repay the loan upon your early demise, there is still a large hole in your finances – your income and the ability of your surviving family to survive.

It goes without saying that nothing can replace you, but your income is currently keeping your family afloat and without it, things will take a dramatic turn for the worse. Your wife is left with the children, debts and living expenses. The state may help to a certain degree but it is going to be difficult. You wife needs to go out to work to replace your income but cannot because of the children.

By providing a lump sum in the event of my death my wife will be provided with many options. How she goes about exercising these options is the subject of another article but the benefits of taking action and providing a safety net for your family cannot be underestimated. Do not leave your family without options, should the worst happen.

Graham Turnbull is a freelance writer from the UK and works on behalf of a number of leading corporations. He is currently working on behalf of a leading serviced offices company.

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