There are many stages in life when we should re-evaluate the need to protect our families.
No one likes to think about a time after they’ve gone. Yet there are milestones in our life that do, or should, prompt us to think about the future and what might happen to those we leave behind. That’s where life insurance can provide peace of mind for you and your loved ones.
- Single adulthood
If you’re a 20-something, you’re more likely to be single and not to have children; so you might not have given life insurance much thought. But there are several reasons why you might want to think again.
Do you have credit card debts or a university loan, or do you share a debt, such as a mortgage, with someone else? Having life cover in place can ensure that your debts are paid off in the event of your death, rather than putting that additional burden and strain on those you leave behind.
You may decide to settle down in your 30s or 40s. As plans for marriage and starting a family become a reality, the reasons for having life cover become far clearer. But the downside is that, by then, you may be facing higher premiums. So, it can be cost-effective to buy life insurance when you’re younger.
- Getting married
When you marry, you accept responsibility for another life, and shared responsibility for income and debts. Death will leave the surviving spouse responsible for both; but having life cover in place enables you to contribute to your partner’s financial security after you’ve gone.
A mortgage is the biggest debt most people are likely to incur, so enabling your partner to pay off the balance if you die is one of the most important things you can do for them.
Joint term insurance is usually cheaper, but in most instances only pays out once: which would leave the surviving partner needing to take out their own policy after that, when it could be more expensive. Two single policies can typically provide a higher level of protection and can pay out on the deaths of each person. It’s also worth bearing in mind that it removes some complications if the relationship comes to an end.
- Parenthood
Having adequate life insurance for each parent is critical when your children are young. Raising a child is expensive, even before factoring in things such as private education and university costs.
Whilst the first thought might be to have cover in place for the main breadwinner, the value of the role performed by stay-at-home parents also shouldn’t be overlooked. It can be especially difficult to assess the potential financial impact of the death of a parent who spends most of their time looking after children and the household. A good starting point is to estimate the costs of buying in these services.
If you’ve divorced, you will want to consider steps that ensure children are provided for when you die. There are various trust structures that can be used to give you the assurance and peace of mind that your chosen beneficiaries will receive what you wish them to and cannot be excluded by events or actions that are taken after your death.
- Owning your own business
If you’re self-employed, there’s a good chance you have invested substantially in your business. Adequate life cover can ensure that any debts the business has incurred are covered in the event of your death, avoiding the need for your family to find the funds or, potentially, sell the business you might have hoped to pass on.
- Empty nesters
By the time you are in your mid-50s, there is every chance that your children will have flown the nest and that your mortgage is all but paid off. But that doesn’t mean you should stop thinking about protecting your family and wealth.
It’s still important to have life cover in place if you have financial dependants, such as a spouse. If you have a large estate and are concerned about Inheritance Tax (IHT), then a life insurance policy placed in the appropriate trust can provide a sum of money to pay the tax bill after you die, so that your estate can be passed on in full to your family.
Whether you are young or old, life insurance underpins most good financial planning, especially for those with financial dependents.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The Partner Practice is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website www.sjp.co.uk/about-st-james-place/our-business/our-products-and-services. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.
In the UK, Trusts are not regulated by the Financial Conduct Authority.
Roy Duns
Scrimger & Oakes Limited
Senior Partner Practice of St. James’s Place Wealth Management
Tel No: 0191 3851530
www.sjpp.co.uk/scrimgerandoakes
