Make sure that your loved ones are financially secure
This will inevitably mean that they will need to take out a mortgage. These and other competing financial factors tend to dissuade young people from taking out life insurance. There are, however, two other factors, that are not money based, which can deter young people from insuring against their death.
The first of these is that young people tend not to see the need for life insurance for the very same reason that the life insurance companies are prepared to offer them cover for relatively low premiums. This is that they do not believe their death to be imminent and therefore do not perceive the need to take out insurance against the financial consequences of it.
The second reason is that young people are substantially less likely to have any dependents. Therefore, those that are able to envisage the possibility of an early death no not assess there to be any need to insure against it because, except for the payment of funeral expenses, there are unlikely to be any adverse financial consequences to their family should they die.
For all these reasons, therefore, people tend not to take out life insurance as soon as they should do.
When they do eventually take out insurance there are a multitude of factors that need to be analysed in deciding how much cover to take out.
The first and most important of these factors is the number and age of the dependents that you have. The more young dependents the more likely it will be that the financial consequences of the breadwinner’s death will be huge.
The second factor, which is intrinsically linked to the first, is the financial need of the family unit. The more expenditure that is involved in running the family, the higher the insurance payment needs to be on the death of the policyholder. It is essential to calculate the amount of cover that you will require to ensure that your family does not suffer undue financial hardship as a consequence of your death.
One way of assessing the correct amount of life insurance and the type, together with the amount of the premiums that you need to make is to consult with one of the manyinsurance brokers whose speciality is in life insurance. There, on a personal basis, you can get professional advice to help you decide on the most appropriate insurance policy for you. However, it is almost always the case that part of the premiums that you will pay by reason of following that particular route will be swallowed up in agent’s commission. In other words, some of the money that you are paying out every month for life insurance premiums does not actually go into the insurance “pot”.
It can be argued, of course, that the deals that insurance brokers
can find are so good that you will still have a superior policy,
even after the deduction of commissions.
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