Life insurance provides money where there is a financial need resulting from a death, although there may be other reasons to buy cover.
- Paying off a mortgage (or other loan) if a borrower dies.
- Protecting a family against the early death of a spouse, partner or parent. Life insurance provides a lump sum or income to help compensate for the loss of someone’s salary. Where there are young children, any need is likely to be greater but decline as they become more independent.
- Paying for a funeral.
- Paying inheritance tax (IHT).
- Protecting a business against the financial consequences of the loss of a business owner or key employee.
You can have life insurance on the life of one person or on the joint lives of two. More is possible, but is unusual except for group life insurance, which is usually bought by employers.
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