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Life insurance: Do I need it?

Young family at the beachThe decision to buy life insurance can be a difficult one to make, as at the end of the day, it’s just one more cost to add to the regular outgoings. So, if you’re wondering whether or not you really need to have it, read on.

Who should get life insurance?

Put simply, if you have financial obligations that you could leave behind when you die, then it might be worth thinking about getting life insurance. These obligations could include mortgages or existing debts, but also family obligations you have not yet had to meet, such as caring for your children or putting them through university.

For example, when buying a house, it might be wise to think about mortgage life insurance. This will last for the duration of your mortgage and is designed to pay off the full debt in the event of your death – meaning that family members are not laden with the responsibility for it. Premiums will also reduce as your mortgage is paid off.

The same goes for any other loans or financial commitments you have – all of which could be covered by a standard life insurance policy. The kind of policy you might want to get is also likely to be dictated by your circumstances – for example, if you are married and both earning, you might consider joint life cover, which will pay out in the event of the first bereavement.

Young, free and single?

If you are young, single and free of any major obligations, it might not be worth thinking about life cover just yet. However, that isn’t to say that young people should ignore life insurance altogether. In fact, the younger you lock into whole of life insurance, the less you’re likely to pay in premiums for the duration of the policy. This is because your premiums – which remain fixed forever in some whole-of-life policies - are related to your health and, in turn, your life expectancy, which is likely to be better in your younger years.

As a rule, whole-of-life insurance is generally a more expensive form of insurance that covers – as the name suggests – the whole of your life, as opposed to term life insurance which will pay out during a set policy period. Also, it is important to note that whole-of-life cover is a combination of investment and insurance and, as a result, is something that requires proper financial advice before purchasing.

Simple ways to reduce premiums

If you are considering life insurance, it’s important to consider how much you actually need, and which policy is the most cost-effective for your needs. On top of that, there are some things you can do that could affect how much you pay. While these tips aren’t guaranteed to save you money on your life cover, following as many as you can could well help you keep the cost of premiums down.

  • Get fit and keep fit – Just doing a little extra exercise can work wonders for your health. Some studies suggest that regularly carrying out ‘endurance’ exercise such as swimming, running or walking can add as much as six years to your life expectancy – which is more than just good news for your wallet.
  • Quit smoking – Insurers use a very simple model for smokers; if you have used tobacco in the last 12 months then you are a smoker – meaning your premium could almost double instantly. This might seem harsh on the occasional cigar puffer, but, in the main, it means that cutting out the smoke entirely is the only way to be sure of not paying the price.
  • Cut down on drink – You don’t necessarily have to give up entirely, but cutting down the amount of alcohol you drink could easily have an impact on the amount you pay for life insurance.
  • Shop around – There’s every chance that, if you’re arranging a mortgage, your lender will also try to sell you mortgage life insurance to go along with it. However, probably the best way of cutting the cost of your insurance is by shopping around – so why not start comparing life insurance right now?

If you have more questions about life insurance read our tips on which life insurance is right for you and how much life cover you need .

Having trouble working out how much life cover you will need? Our life insurance calculator could help you out.

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Stephen Jones

Stephen Jones

Stephen Jones was a reporter for between 2009 and 2010, writing personal finance news and blogs. He has since moved on to MSN Money but continues to write for

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