There are some people that have life insurance and others that do not and you may wonder whether it is something that is worth having or not. It is a good idea to therefore think carefully about the advantages and disadvantages and think about whether you feel that it will work for you in your specific situation.
Advantages
Life insurance will pay out in certain situations. There are different types of policy and some will pay out if you die and others if you get ill. Sometimes these are held together with another financial product. For example, if you have a mortgage, then you have to have a type of life insurance that will pay off the full amount of the mortgage off, if you die. The mortgage provider wants this put in place so that they know that this loan will be repaid. Other people might want this sort of cover so that any depends they have, usually children, will get some money if they die and can no longer provide for them. Some companies offer insurance as part of a bonus package to employees so that they get cover if they are injured or die while at work.
A lot of people like to have the peace of mind that their family will have cover if they are no longer able to provide for them. This could be quite a significant sum of money or it could be an amount each month and this can be extremely helpful. If there is no other earner or no other source of money, then this can be really important for them to make sure that they can still have a good standard of living or at least have a lump sum to pay off the loans.
Disadvantages
The problem with life insurance is that you have to pay for it. You have to make monthly instalments until a claim is made on the policy. If you are paying into it for a long time then you could end up paying more in than you or your family ever get paid out. You may also find that paying this amount might be more than you can manage. We all have lots of things to pay for and with the life insurance on top, it could mean that you struggle.
Life insurance will vary in price as well. If you are young, fit and healthy and do not smoke it will be relatively cheap. However, if you smoke, have an illness and are older it will be a lot more expensive. This is because there is a greater risk that you will die younger and the insurance company wants to try to get more money out of you in premiums than they will have to pay out. With an insurance linked to a loan, such as a mortgage, this will be cheaper as the insurance will only last the length of the mortgage but if it is a policy that you intend to pay until you die, then you will have a pay out at some point and the insurer will want to try to get that money form you first.
So, whether the insurance is right for you will depend. If you have to take it out, then you will have little choice. If you do have a choice, then it is worth thinking about whether it is worth paying in that much money for the return that will be given. Consider whether it might be better to pay that money into a savings account each month instead. Then you will get interest on it and it may add up to more money than would be paid out by an insurance. Of course, there is a risk that you may die before you accumulate much money or that you will spend the money or not have the self-discipline to save it. You will need to decide whether this is likely to be a problem for you or not.
