If you have financial dependants be it children, a partner, elderly parents, relatives who depend on your income, or you have debts like a mortgage, or you are likely to have an inheritance tax bill in the event of your death then YES you should have a life cover.
Life Cover for income replacement:
Life cover proceeds can be used as income replacement if a breadwinner is deceased leaving people financially dependent on you exposed and unable to pay for things like the mortgage or rent and other daily living expenses. If you have financial dependents especially children you need life cover.
Life Cover for debt redemption:
Life cover proceeds can also be used to redeem any debts the deceased may have like a mortgage, car loan or any other personal loans. Failure to completely redeem or maintain monthly mortgage payments means that your family faces eviction. The house will be repossessed and sold to pay off the mortgage. Any other unsettled debts will e part of the deceased’s estate and will need to be paid before and money is made available to the beneficiaries.
Life Cover for inheritance tax:
If you are rich and likely to be affected by inheritance tax then it means huge part of your estate will be going to the taxman. If you want your beneficiaries to inherit your full estate, then its best you take a whole of life cover proceeds of which will pay off the tax bill leaving your beneficiaries to inherit 100% of your estate.
The amount of money paid out on claim on a life cover depends on the level of cover you buy. There are mainly two types of life cover: Term Life Insurance & Whole Of Life Assurance.