In the words of one client: ‘It’s the only time you wilfully hope that you’re wasting your money’.
Let’s face it, paying out for life insurance can often feel like throwing money down the drain. Especially at a time when it seems everyone is feeling the pinch. When you’ve got a long list of outgoings it’s tempting to feel that life insurance payments could be put to much better use elsewhere in your monthly expenditure.
As humans we are conditioned not to want to think about, “what if…?” Dwelling on the possibilities of things going badly wrong isn’t fun for anyone. It’s scary and upsetting. Investing in life insurance can feel a little like tempting fate and when you’re young and healthy with your life in front of you, you feel invincible. Mortality is not something you want to consider when you’re planning your future or working out how you can tweak your budget to include that fabulous new coat or the latest gadget. If you are single and without dependants then life insurance probably isn’t for you but if you have a partner and/or family then it’s certainly worth looking into.
Perhaps the way to look at life insurance is not to think that having it means you’re planning for something to go wrong but that having it means you don’t have to worry that something might.
Say the worst happens. If you die, would your dependants be financially secure? How would the family survive without your income? If you were a stay-at-home parent would your surviving partner be able to cover childcare costs to enable them to continue working?
Having a life insurance policy means that on your death your dependants would receive either a lump sum or monthly payments over a specified period. This money can be used to cover mortgage payments and other debts, everyday living expenses and future financial commitments such as your children’s university fees. It can also mean your family could still manage to go on holiday, indulge in Christmas and birthday treats and continue attending sports clubs, dance classes or any of the other activities that they are used to enjoying.
If the worst does happen, grief is exhausting. Holding everyone together and making even the smallest decision can feel monumentally difficult. Just getting through the daily routine can use up any energy you have. If your world has fallen apart with the loss of a loved one, worry that you are also at risk of losing your home and your lifestyle makes everything so much worse. Children, in particular, at times of trauma can be reassured by the security of home and familiarity of routine.
Pay out from an insurance policy doesn’t just buy a roof over your head and food for the table, it also buys the time to grieve, the time to reassess everyone’s needs and to have the freedom to do what you feel is right for your family.
Life insurance is a luxury. The luxury of not being kept awake in the middle of the night worrying, “what if...?” The luxury of being able to cope if something goes badly, unimaginably wrong.
Let’s hope it’s a waste of money.