When To Get Or Drop Life Insurance

Life insurance: Do you have it? Should you have it? And if you do, should you get rid of it. Many reasons will influence the decision. The following is a guide to help you understand whether it’s a viable product for your circumstances.

Life Insurance 101

• What is life insurance?
• Do I need life insurance for the whole of my life? 

What is life insurance?

Life insurance is a policy that pays out to the beneficiary in the event of your death. It should be considered as a tool for reducing risk, meaning loved ones won’t suffer financial hardship after you’re gone. For example, they won’t lose the house or have to worry that they don’t have an income.

Do I need life insurance for the whole of my life?

The answer to this is determined by individual circumstances. Do you have present or future financial obligations? Have you recently committed to a long-term loan for a house or car? Or have you paid off the large life purchases or are nearing the end of the term? 

For many, if the hefty commitments of a mortgage or car have been realized, then it might be time to consider whether life insurance is still a necessity. 

When to Buy and When to Drop

• Reasons to purchase life insurance
• Reasons to drop life insurance 

Reasons to purchase life insurance

Let’s look at the reasons why you might consider purchasing a life insurance policy. 

• When you take out a mortgage: While doing so isn’t mandatory by law, many lenders stipulate you do so in their Ts & Cs.
• If you financially support another person: This could be a partner, child, aging parents, or anyone else you have responsibilities for.
• You have a high-risk job: Premiums will be higher than average, but this is definitely a valid reason to have adequate life insurance.
• A change in personal circumstances: Getting married, starting a family, buying a house with a partner… Any of these would warrant the purchase of a life insurance policy.
• You take part in extreme hobbies: Again, this will trigger higher premiums but will ensure debts are covered should the worst happen.
• If you have considerable debt: This includes private student loans as they are not honored when a person dies (unlike federal student loans).
• You work for yourself: Life insurance can be very beneficial to those who’re self-employed. It will ensure stakeholders and employees will continue to get paid should you die. You can also use it as collateral for a small business loan.

Reasons to drop life insurance

Conversely, the following might be reasons to ditch life insurance: 

• You no longer have a mortgage: Perhaps you’re drawing towards the end of the term. In such a case you might consider reducing the level of cover. This means your family is still adequately protected should the worst happen, but you can use the additional money saved on premiums elsewhere.
• Your savings are larger than your debts: Adequate savings and assets to more than cover your debts might be a reason to cancel your life insurance.
• You’re unlikely to have future large financial obligations: If you’ve paid for the wedding, covered children’s education fees, and have the funds to cover funeral expenses then it might be a sensible step.

Concerned About Changing Circumstances? Contact Capita Today 

Your financial needs change throughout your life and with it the need for certain benefits, such as life insurance. However, this is just a single aspect of healthy financial planning, and one that requires the best advice to ensure your assets and income match your needs.

Capita is a market leader that can assist with all aspects of your finances, including whether or not you should have life insurance. 

For more information on this and all aspects of income—both when working and in retirement— visit

https://www.capitafinancialnetwork.com/services/income-planning and book an informal chat today.