Nobody wants to think about the worst happening, but death is a fact of life, and it’s a good idea for you to have a plan in place to protect loved ones financially in the event of death. Why should your customer consider putting Life Insurance in place? If you or your partner die prematurely it could have serious implications for your family: it could mean a significant and sudden reduction in their financial wellbeing as:
- Earned income will stop.
- Loans may become repayable.
- Inheritance tax could arise for dependants, depending on what and how much they inherit from you or your partner.
While social welfare benefits payable on death, such as the widow’s / widower’s / surviving civil partner’s pension, may replace part of the earned income, the benefits they provide are low and are designed to cover only the basic necessities of life.Putting life insurance in place can ensure that in the case of a premature death, the family will be on a firm financial footing.Your income is their your most valuable asset. It’s important that you understand how your family’s standard of living would be affected if you were no longer there to provide for them.
How much cover do you need?
Identifying the level of cover required for you or your partner will depend on your individual needs. The level of cover required will depend on the level of income that needs to be replaced, along with any additional expenses that may be incurred.The level of cover recommended should ensure that your family’s standard of living won’t change in the event of a sudden death. It should provide enough cover to:
- Replace the gap in income
- Clear any loans or mortgage
- Ensure there is money to cover larger costs that may arise in the future: saving for third level education
- Compensate them should the surviving partner / spouse have to reduce working hours
- Cover the cost of any additional supports that may be required within the home, for example housekeeper / cleaner.
The Life Assurance Association provides the following guidelines on levels of life cover:
