Life insurance is a reasonably obvious thing to have when there are young children. But if there are no young children, or if the children have grown up, life insurance does not seem so obvious.
There are still reasons to get life insurance.
Firstly the children may still need support into their early careers. It is very easy to underestimate how long children need support, particularly if they are being encouraged to do things, such as going to university or taking professional training, which are going to lower earning power in the short term.
The mortgage for the main house and other loans may not be paid off if there is a sudden death. These loans may not only include home loans, but also secured loans and credit card debts. While unsecured loans may usually only be claimed against an estate, secured loans can also mean that a house can be sold. In either case the family may be considerably poorer because the loans have to be repaid at an early date. Life insurance is very useful here.
In many cases life insurance is sold as part of the loan, whether it is a home loan or a credit card, although it’s rarely called life insurance. This is rarely a good deal as the insurance that is attached to the loan will be considerably more expensive than standalone life insurance. It is also a good deal less flexible so if the balance of the loan is paid off then the surplus is simply wasted rather than going on other family expenses. In some cases, particularly home loans with a low deposit, then this may be a condition of the loan, but standalone life insurance is often a better deal for a borrower if it is an option.
There is also the position of the spouse. It may be the case that the spouse has limited his or her career to bring up children or for another reason and is capable of earning far less than the main wage earner. In these cases it is a good idea to plan ahead for what happens if the main wage earner will die.
There are also a number of end of life costs that people don’t tend to think are large, but they can add up. A large cost is that of the funeral, but there are also burial costs and the cost of things such as headstones. This can sometimes be crippling for a family.