When should I buy life insurance and is it worth it?
The thought of passing away and leaving loved ones behind is one that nobody wants to have. However it is important to consider what may happen to your family and finances if you were no longer here – and that's where life insurance comes in.
The topic of life insurance can often be overlooked or avoided which leaves people confused about it or perhaps don't see a point in figuring it out. Here we spoke with finance experts to explain what exactly life insurance is, when should people get it and the big question – is it really worth it?
What is life insurance?
'Life insurance is a financial product that gives your family or loved ones a cash pay-out if you die while covered,' says Ian Cooper, commercial director and product expert at SunLife.
'Life insurance broadly comes into two main types,' managing director partner at independent financial advisors Hoxton Wealth, Chris Ball explains. 'There is term life insurance and whole-of life insurance.'
'Term insurance covers you for a fixed period of time, let's say 25 years,' Cooper explains. 'It pays out if you die during your policy period. The pay-outs on this type of policy are usually quite large, to cover things like an outstanding mortgage. But if you live longer than the period of cover, you won't get anything back.
'Whole-of-life cover, or 'over 50s' life insurance as it's often called, is only available to people over 49. Simply put, it covers you until you die – no matter how long you live. Because it promises to pay out, the pay-outs are typically smaller than term insurance, to put towards things like outstanding bills or funeral costs.
'One key difference between the two types is that not everyone is eligible for term insurance, and you usually need to answer medical questions in order to qualify. Most over 50s plans, on the other hand, guarantee to accept anyone within the age range, regardless of health.'
When should people start looking at getting life insurance?
'I would say as soon as possible,' Ball says. 'Many people may think life insurance isn't applicable to them or that they don't need it.
'However the areas that a lot of people miss out with life insurance is things that could happen like total permanent disability for example – being in a car crash and not being able to work again. That's the type of life insurance that we kick in at those points to cover you. I always advise clients to make sure that they seriously consider it and not just people with children or a spouse. It's for people of all ages that need an income – which is pretty much everyone,' he says.
Cooper echoes this as he explains that while there is no fixed age at which you should take out life insurance, most people decide to when they get a mortgage or have children. 'But it's important to review your cover needs regularly, to ensure it's covering what you need,' he says.
What are the benefits of getting life insurance?
'Both term life insurance and whole-of-life insurance are designed to help your loved ones at a really difficult time,' Cooper says. 'Whether it's paying off the mortgage, or having the spare funds to put towards outstanding bills or funeral costs – it's knowing that you're giving them one less thing to worry about.
'Customers tell us one of the main benefits for them when they take out a guaranteed over 50 plan is the peace of mind it gives them. Because their pay-out is guaranteed after one or two years, they know their loved ones will have something to help them financially when the time comes,' he adds.
'You also get protection and stability with life insurance,' Ball says.
'Of course it's great accumulating wealth and saving into your ISA or your general investment account and pensions. But what if you can't work, let's say for a period of six to 12 months, because you had a heart attack or a chronic disease. Ultimately people would just end up rinsing their savings if they haven't invested in life insurance.
'Hopefully it is the biggest waste of money that you spend but it does give peace of mind. Most people insure their cars, phones and homes – but not a lot of people insure themselves – but you are the most important thing,' he says.
Is life insurance worth getting?
'When people ask me this, I suggest thinking about what financial help your loved ones might need if they were to die suddenly – not something we want to think about, I know,' Cooper says.
'For example, if they were faced with a £4,000 funeral bill, could they afford to pay it? If not, it could add a lot of stress at an already difficult time, so a life insurance pay-out could be a big help. If you already have plenty of money in savings or have funds from other sources lined up, you may not need life insurance. It's totally up to you. But having a financial safety net in place for our loved ones can be hugely reassuring for everyone.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
BBC News
26 minutes ago
- BBC News
Public toilet restoration approved by Chichester District Council
Eight public toilets in the Chichester district will be refurbished after getting council plans follow the demolition and rebuilding of the old toilet block in Tower new Tower Street toilet, which opened earlier this month, cost more than £200,000 and has been said to be inspiring "envy" in other areas after receiving positive Google reviews. The cost of the latest scheme has not yet been revealed but will be made up of money from the Asset Replacement Fund and from reserves. Chichester District Council does not legally have to provide public toilets, but leader Adrian Moss said they were important to residents, adding that the Tower Street project had been "a triumph".Councillor John Cross added: "There is a bit of toilet envy going on with other district councils because our Tower Street toilets have been given a five-star rating on Google and other district councils want the same!"The toilets set for improvement are in Bracklesham Bay in Bracklesham, Pound Road car park in Petworth, Lifeboat Way in Selsey, Northgate car park in Chichester, Avenue de Chartres car park in Chichester, Hillfield Road in Selsey, Kingfisher Parade in East Wittering and Marine Drive in West council will now look for a contractor to carry out the work, which will be a phased approach over the next two years, said the Local Democracy Reporting Service.
The Independent
36 minutes ago
- The Independent
This vision for Britain's nuclear future is to be warmly welcomed
A politician with such a long and mixed track record as energy secretary Ed Miliband should perhaps have been more wary of declaring that nuclear power will 'deliver a golden age of clean energy abundance', and that it is 'the only way to protect family finances, take back control of our energy, and tackle the climate crisis'. Such things may yet prove to be so – and indeed investment in a new generation of nuclear power may well be inevitable. However, it is equally the case that the history of nuclear power in Britain, spanning some seven decades, has been far from an unalloyed success. At home and – sadly, more dramatically – abroad, scientists and engineers overconfident in their abilities and seized by the promise of the future have found themselves all too often watching the consequences of their complacency played out with devastating effect, most infamously at Fukushima, Chernobyl and Six Mile Island, but also at many other locations. Previous visions of a golden age melted down as rapidly as the faulty reactors. If the early post-war hopes for the peaceful use of nuclear power had been well founded, just as was claimed in the 1950s, the abundant electrical power generated by nuclear fission would have been so cheap it would have been pointless to meter and charge for it, fossil fuels would have been rendered redundant, and, as it happens, the pace of climate change greatly retarded. But it was not to be. Therefore, the public is right to be sceptical now about why, in the old and dangerous phrase, 'this time it's different'. With those heavy caveats, Mr Miliband's announcements about Britain's nuclear future are to be welcomed, and his reasoning endorsed. He is right, above all, to seek a great variety and plurality in sources of the UK's long-term energy supply. As the Germans discovered when the Nord Stream pipelines and gas supplies from Vladimir Putin's Russia were cut, it is extremely unwise to become so heavily dependent on any single source of energy. Mr Miliband declares himself an enthusiast for offshore wind, onshore wind, solar, hydro, nuclear, and even fossil fuel sources where effective carbon capture can be achieved. In the nuclear sphere, he's also correct to adopt the previous government's plans for small, 'modular' reactors, which could speed up the transition from carbon and reduce costs. The only disappointment in that area is that time has already been lost, and Rolls-Royce and other private interests are not yet in a position to make any deployment pump meaningful wattage into the National Grid before the early to mid-2030s, as Mr Miliband told the House of Commons. The £14.2bn investment in the Sizewell C plant is a more traditional kind of project, and carries the familiar risks. Mr Miliband will need to be much more specific about private sector involvement, and who will bear the financial risks for such a costly programme over such a long and uncertain timeframe. Disposal of waste and decommissioning costs will also have to be fully transparent to carry public opinion, especially for the people of Suffolk, who will be hosting this latest iteration of a long-standing lodger. Of course, it all would have been better if successive governments hadn't slowed the nuclear programme in the aftermath of successive accidents, and had found the money to invest in previous decades. In fact, the Sizewell C plant is set to become Britain's first new nuclear power station since 1995. The French have long prioritised nuclear power and weathered the recent energy crisis better than the British or the Germans, more tied as they were to foreign gas and soaring world prices. The aim now is to ensure that the new generation of nuclear power doesn't turn into a costly disaster, and can indeed help the transition to renewables and lower energy bills. Cheap, plentiful power and net zero on track? Mr Miliband may yet leave a legacy more permanent than any of his colleagues. Golden, indeed.
Telegraph
37 minutes ago
- Telegraph
Six years late and £28bn over budget, this project signals disaster for Ed Miliband's nuclear plans
'Build and repeat.' That is the plan for Sizewell C, the nuclear plant on the Suffolk coast which Ed Miliband has announced plans to pump billions of pounds into. Writing in The Telegraph, he hailed a new 'golden age' for the British nuclear industry, pledging £14.2 billion for two reactors at Sizewell which will, eventually, provide six million homes with electricity. Eventually being the operative word. News that the Government is throwing its weight behind nuclear in the midst of the Energy Secretary's pursuit of net zero was met with relief by some campaigners – and, indeed, by anyone who doesn't want to find themselves plunged into darkness if the grid is forced to grapple with unreliable renewables. But concerns have been raised about the modelling. Sizewell is to be a rinse and repeat of Hinkley Point C, the two-reactor power station in Somerset which has been beset with problems from the moment EDF first broke ground there in early 2017. The Government says it's to be almost an exact replica. Meanwhile on its website, Sizewell C points to 'the benefits of replication'. 'Sizewell C will use the same design as Hinkley Point C,' it adds. It says Hinkley has already 'created a huge workforce and supply chain' and that replication 'means Sizewell C will benefit from all the efficiencies and expertise learnt by our sister project'. Efficiency and expertise. It's one way of summing up Hinkley, though it does rather overlook the £28 billion it has gone over budget to date, the endless delays and challenges from environmentalists, not to mention the international political tensions. China's General Nuclear is a significant shareholder in the project, but in 2023 halted funding for it as relations between London and Beijing worsened; the same year the UK government took over the country's stake in Sizewell C. Meanwhile, work at the site crawls on, its deadline shifting and bill expanding. Still, EDF says Hinkley's second reactor is being built 25 per cent faster than the first unit, and suggests this should be taken as good news for Sizewell's envisaged two reactors, which are, effectively, planned to be the third and fourth in Britain's nuclear quartet. Meanwhile, experts agree it makes sense in principle to transfer the lessons learnt and systems already established at the Somerset site to Suffolk. Iolo James, head of communications at the Nuclear Industry Association, stresses the importance of 'building in fleet rather than building one at a time'. 'The more you build, the cheaper and quicker that is,' he says. That may be true, though there has been nothing cheap or quick about Britain's nuclear renaissance so far. Where we were once pioneers in the push for nuclear power (the world's first commercial-scale nuclear power station came online in Calder Hall, Cumbria, in 1956), decades of sparse investment have meant the UK has now fallen far behind other countries. At Sizewell, many question how possible it will be in practice to shift operations from one side of England to the other. Alison Downes, of the campaign group Stop Sizewell C, suspects the idea that you can simply move teams and processes without a hitch is unrealistic. 'The company want people involved in Hinkley Point C to come over and do what they've done there again at Sizewell C, but unless there's a seamless transition and the roles that they're just finishing at Hinkley start at Sizewell, then the likelihood is those people will go off and find other jobs and then are lost to the supply chain,' she says. 'Hinkley has been delayed, yes, but Sizewell has also been delayed. It's very difficult to get two projects of this size to perfectly dovetail.' Even if they do manage to bring some of that infrastructure across, it's hard to make the case that Hinkley has been a poster project for Britain's nuclear prowess. Last February, EDF said it had taken a near £11 billion hit amid delays and overrunning costs on the project. The month before, it said the plant was expected to be completed by 2031 and cost up to £35 billion. Factoring in inflation, the real figure could be more like £46 billion. It was, let's not forget, initially supposed to have started generating electricity in 2017 and cost £18 billion. When construction finally began the same year, it was expected that the plant would be completed by 2025. It will now come online six years later than that and at more than double the cost of the initial estimate. So not, it would be fair to say, an unmitigated success as major infrastructure projects go. Then again, some would argue successful infrastructure is an oxymoron in Britain today. The latest estimated spend for HS2 is £102 billion – almost double the projected cost. Crossrail cost £4 billion more than expected and weathered significant delays. And across the country, countless projects – bridges, tramlines and motorways – remain unfinished or unbuilt altogether. 'The public expectations on this sort of stuff is so low nowadays,' says Ed Shackle, a researcher at Public First. 'With all of these big promises – and that goes for things like HS2 as well – they are not expecting the Government to do anything. They're very sceptical that the Government could deliver anything big.' The plan to launch us into a nuclear-powered future might sound promising, but can Labour get it done? While the public is supportive of the idea of projects like Sizewell in principle (Public First's polling shows there is a 41 per cent net support for the building of new nuclear power stations) and wants the Government to make big swings, time and again they have seen these things fail or fall by the wayside. 'They think the country is in a very bad way and we need major overhaul, but major projects have been poorly managed and delivered, and in their local areas, people see decline everywhere,' says Shackle. 'They want to see actual delivery behind these big promises.' Downes points out the last update on Hinkley came in January last year, 'when there were still five or six years to go, so there was plenty of time for things to get even worse'. That same month, EDF said further delays were in the offing because of a row about fish. The energy company was struggling to agree protection measures for fish in the River Severn. Fears thousands could be killed in water cooling intakes had 'the potential to delay the operation of the power station'. This was after months of tussling with environmentalists over the plant's seawater cooling system. At the time, Sir Keir Starmer, then in opposition, said delays to Hinkley were evidence of a system that was 'holding us back and stifling growth', citing 'countless examples of Nimbys and zealots gumming up the legal system often for their own ideological blind spots to stop the Government building the infrastructure the country needs'. Now, dovetailing the construction of Sizewell with Hinkley is one of the main things bolstering confidence in the Suffolk project. Stuart Crooks, managing director of Hinkley Point C, said the 'innovation and experience' developed at Hinkley 'will benefit our twin project at Sizewell C from the start'. 'We have trained a new workforce and built the nuclear supply chain,' Crooks says. 'Now those skilled workers and businesses can give Britain the energy security and economic growth it needs at Sizewell C, together with small modular reactors and future large nuclear plants.' Supporters also argue things will be different the second time around. The first nuclear build since the 1990s, Hinkley, they say, was always destined to take longer and cost more than initially predicted. 'It's been well documented that Hinkley has had issues in terms of going over budget, and the timescale,' says James. 'That's predominantly due to the fact that we haven't built a nuclear power station in a generation... We've had to relearn how to build them. 'The way Sizewell will benefit from that is all the learnings from Hinkley will be there for Sizewell and its team when it starts construction in earnest... If you view Sizewell C as unit three and four [after Hinkley's one and two], then you'll see the efficiencies become even greater for that project.' Julia Pyke, joint managing director of Sizewell C, tells The Telegraph the site would be an 'exact copy, above ground, of Hinkley Point C'. 'When the design for Hinkley was brought into the UK, they had to make 7,000 design changes – because we're a copy, the equivalent for us is just 60,' she says. 'What that means in practical terms is that we know, in a way that Hinkley didn't know, how much concrete we need to pour, how much steel we need, how much cable we need to buy; we know how many hours it took to undertake a task for the first unit at Hinkley and the savings they were able to make for the second unit, and we can learn from that. We have a greater cost certainty because of that fixed design.' It sounds promising, but campaigners are less optimistic, pointing out the significant geographical differences between the sites. 'I get the principals behind replication – but the thing you can't do is replicate the site,' says Downes, who understands Sizewell is set to be a more expensive site to develop than Hinkley. 'There are very specific complexities around the Sizewell C site... It's quite likely that any savings they might expect to make through replication will be absorbed in the more complex groundworks.' While Hinkley is 'a dry site', Sizewell C is by the sea. 'It's going to need huge sea defences. They've got to build a crossing over a Site of Special Scientific Interest. They've got to build a deep cut-off wall. There's a lot of associated development that's needed because there's less infrastructure than there is down at Hinkley Point C. These are the sorts of things that concern us.' The Energy Secretary, for his part, is still adamant this is to be the start of a 'golden age'. 'We will not accept the status quo of failing to invest in the future and energy insecurity for our country,' he said. 'We need new nuclear to deliver a golden age of clean energy abundance, because that is the only way to protect family finances, take back control of our energy, and tackle the climate crisis.'
