Generally, the only people who need life insurance have dependants – usually children, but it could be anybody who relies on you for money, such as a sibling, spouse or ageing parent. Here are some considerations.
Calculating Your Worth
Life insurance is usually geared towards young employed people who have families: it is intended to replace your ‘value’ once you’re gone. For working parents, much of that worth is your salary. On your death, you will desire that your family gets enough money to put in place of your salary for the next six years – if not more.
Even a stay-at-home parent has financial value to the family. If they die, the spouse needs to stay working, so the policy will need to cover day care or a nanny.
Insurance for Key Life Stages
Sometimes people buy policies upon their marriage – especially if the insured party gets paid a lot more than their spouse, or if either the spouse or the insured has financial dependants.
Many people purchase life insurance on their first pregnancy.
At retirement age, your children are likely to be financially independent, and you may be living off investment income and retirement savings. However, you may choose to buy a life insurance policy that covers unexpected long-term care and medical expenses.
Some more advice is found here: https://www.moneyadviceservice.org.uk/en/articles/life-insurance-choosing-the-right-policy-and-cover.
Further Reasons for Getting a Policy
Sometimes older people retain life insurance policies as a way of paying for ‘end of life’ expenses and funeral and burial costs.
If you purchase a home, it’s usual to sign up for a mortgage lasting 30 years. But what takes place if you die within ten years? Some special life insurance policies are linked directly to mortgages and will decrease in value as you carry on paying off your mortgage debt.
A less frequent life insurance policy is connected with business. Suppose you are a partner in a small business and its success notably relies on your skills at bringing in money and clients. Sometimes people buy policies appointing their business partner to be the beneficiary. This cash could assist the business to stay afloat while they are getting along without you.