At what point do I no longer need life insurance?
We get asked a number of questions here at Life Insure, and one of the most common is people asking at what point they no longer need their life insurance cover. Most people in the UK take out term life insurance, which offers them life insurance over a certain term, often running until the end of their mortgage. Some will pay off their mortgage earlier than this point, whilst others will remortgage several times and still have several years of mortgage left to pay off at the end of their life insurance.
Many consider whether to extend their life insurance, whilst others will question whether there is any point in keeping their life insurance after they’ve paid off their mortgage.
We look at the point in life where term life insurance customers may decide they no longer need a life insurance policy.
Life insurance provides customers with protection for their financial responsibilities, with those who have a mortgage, children and loans to consider the most likely to take out life insurance. It’s those responsibilities we should look at when deciding whether you can afford to not have life insurance anymore, as well as your current financial situation.
Your mortgage is usually your single biggest financial responsibility. If you have paid off your mortgage, or have sufficient savings to easily pay off the remainder of your mortgage, then it’s not essential to have a life insurance policy to cover that.
Your children can also be a financial responsibility, especially when they are younger. If your children have grown up, left home and become financially independent then you won’t need to worry about them financially if the worst did happen, but if you still intend on helping your children with costs like their wedding, or a first house deposit, then there is an argument to keep it in case.
You also need to take into account your financial situation at home. If you still earn good money, and your partner does not work, how would you not working affect your partner’s financial situation. If you have sufficient savings and income from other sources not reliant on you being alive then you may be able to stop with your life insurance, but for such a small amount it could still be well worth keeping if you are not having to renew it.