Insurance is something we all take out for various reasons, including to help cover our homes, possessions, and businesses in case the worst should happen. When we reach a certain age, we may also consider getting life insurance.

Life insurance can be a solid choice for those looking to ease the financial liability on their loved ones once they pass but there are also many other benefits you may not be aware of.

There are different types of life insurance

Life insurance policies come in many forms, meaning you can easily choose the right plan to suit you and your family. The two most basic types are term and permanent.

A term life policy means you pay a pre-determined premium for a defined term, which could be 10 years. If you pass during this time, a payout may go to your beneficiaries. If not, once the term ends, you’ll need to opt for new coverage or go without. Alternatively, a permanent policy is one that lasts your entire life.

Other types of life insurance include joint life insurance, over 50 life insurance, critical illness cover, and decreasing term life insurance. It’s recommended that you take a look at each before making a decision.

Provides security for your family

Once you turn 50, you’ll have likely reduced your outgoings and so should be in a more financially stable position; however, there may still be valid reasons to have some form of life insurance in place. An over 50 life insurance policy is designed for those aged 50-85 to help lessen the financial burden on your loved ones upon your death.

Generally, you pay monthly instalments, with a potential lump sum paid to your beneficiaries when you pass. This money might then be used towards debts, mortgages, and funeral costs.

Remember, funerals can be costly, running into thousands of pounds that you may not have readily available. It’s already an emotionally difficult time, so you want to avoid your loved ones being stressed financially as well.

It’s more affordable than you may think

You might be thinking: “I don’t want any more regular expenses.” Particularly during economic struggles, this is understandable; however, life insurance is more affordable than you think – especially when considering the peace of mind it offers.

Monthly premiums aren’t set rates, though, and will depend on various factors such as your age, type of cover, provider, and policy term. Some providers won’t even ask any medical questions when applying if this is something you fear will drastically increase costs.

It can offer tax-free benefits

Although life insurance is typically considered tax-free, it is still part of your estate and so can be subject to inheritance tax. As long as your estate sits below the £325,000 government threshold, your payout will be free from tax.

Should your estate exceed this amount, you can have your policy ‘written in trust’. Essentially, your policy will then belong to the trust, which can protect the payout from inheritance tax.