Deciding If You Need Life Insurance?
Most people are aware of how life insurance works and what are
the events and dangers that it is designed to protect against.
They may also have family commitments and people who they
provide for and know that some sort of life insurance would
protect their family financially, if something were to happen to
them. However, it is still often a very difficult decision to
make if you are trying to decide whether or not you need life
insurance.
Life insurance is a big commitment financially speaking. The
premium can vary in cost but can be considerable, then there is
also the issue that life insurance often extends over many
years, even decades. This means that not only are you committing
to pay the premium for this year, but also for many years into
the future. There are not many people who can say with certainty
what their earnings will be in ten or fifteen or twenty years
time.
There are also early termination penalties, which means if you
want to end the policy before the expiration of the entire term,
you will be financially penalised. This is generally more
relevant for life assurance but can also apply to life insurance
if your rate has been calculated on the condition that you
remain insured for so many years into the future.
If you have life assurance, then it will also be a method of
saving for the future. This is a very popular concept,
especially these days with the growing concern about the state
of pension funds, but it again deserves careful consideration.
There are many ways to save for the future, and by deciding to
do so by way of a life assurance policy still entails deciding
that life insurance is something that you want and are willing
to pay for. If you do not need life insurance, then there are
probably more efficient ways of saving for retirement than with
life assurance, which places a proportion of your savings
against the insurance aspect of the policy.
In general, most people will really only be considering life
insurance if they have a family to support. This can be a spouse
and generally children. However, situations frequently change,
people get divorced, and children always grow up and become
independent. If your family situation is likely to change, you
should familiarise yourself with the ways you can end the policy
early and what penalties would apply. However, if you have a
young family and are concerned about their financial security
for the future, then life insurance will be a great opportunity
for you to provide for these concerns.