NEW! Our Hero’s Journey tool can help you with your next step towards financial freedom - click here to try now.
Advertiser Disclosure

How to decide if you need life insurance

How to decide if you need life insurance
Image source: Getty Images

Not everyone needs life insurance. However, if you are uncertain and you are wondering whether you need life insurance or not, then read on.

Plot your path towards financial freedom with our Hero’s Journey tool!

MyWalletHero is here to help you learn about taking control of your money, whether that’s paying off debt, working towards a short-term money goal, or investing for your future.

This tool can help you understand the next steps on your journey – simply choose a goal that best describes your current interests to get started.

The point of life cover is to provide for your beneficiaries in the event of your death. Therefore, passing away without the necessary life insurance can have dire consequences for the people you leave behind.

Who needs it?

Basically, you will need it if you have any kind of ongoing commitment that depends on you staying alive. Such commitments fall into two basic categories:

  • Anyone who is financially dependent on you, including a partner, children or an elderly relative.

  • A major financial responsibility, the most common being a mortgage or a business.

However, if you are unsure as to how your funeral expenses will be paid for, even if you don’t have any ongoing commitments, then you may also need it.

Who doesn’t need it?

You may not need life insurance if you are one or more of the following:

  • Single and have no dependents

  • Living as a dependent (e.g. you live off your partner’s income)

  • On a low income or eligible for state benefits

How much should I get?

So, you have established that you need life insurance. You will now have to think about your personal requirements.

There are several different formulas available that will work out how much life insurance you require. These formulas are designed to give a rough estimate only.

Once you have a rough idea of what you need, it’s worth consulting a financial advisor who will be able to help you further.

What type should I get?

You will need to decide on which type of life insurance is suitable for your circumstances. There are two basic types of cover.

Term cover

Term cover will insure you for a designated period of time. If you die within the period covered by the policy, the insurance company will pay out. If you die after the end of the period, they won’t pay anything.

You could use this type of life insurance to cover you over the term of your mortgage, for example. So, if you are in this situation and you are wondering whether life insurance is right for you, the answer may be yes, but only for a specific period.

Whole of life cover

Whole of life cover will insure you for the entirety of your life and will offer beneficiaries a guaranteed pay out.

How much will it cost?

Life insurance can be good value for money, but the cost can vary. This will depend on several factors including the following:

  • Your age

  • How healthy you are

  • What your lifestyle is like

  • Whether you smoke

  • The length of the policy

  • The amount of money that will be paid out in the event of your death


Further information on life insurance is available from the Money Advice Service.

It is worth consulting a financial adviser or a solicitor if you have any doubts about the type of life insurance you require.

If you are considering life insurance, think about treating it as part of a larger estate planning process. That way, you won’t leave a financial mess behind that your beneficiaries have to deal with.

Are you making these 3 common investing mistakes?

These all-too-common investing errors can cause you to miss out on the long-term wealth-building power that shares can hold….

To help you side-step these pitfalls, and move forward on your path to wealth-building, we’ve created a free report, “The 3 Worst Mistakes New Investors Make”.

Just enter you best email below for instant access to your free copy.

By checking this box and submitting your email address, you agree to MyWalletHero sending you emails with money tips, along with details of products and services that we think might interest you. You can unsubscribe from future emails at any time. You also consent to us processing your personal data in line with our privacy policy, and our cookie statement. For more information, including how we collect, store, and handle personal data, please read our Privacy Statement and Terms & Conditions.

Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.