Most people think of Life Insurance as a means to protect and provide financial stability to your family and loved ones if something happens to them.
While replacing income and providing that safety net to your family is often a big reason, Life Insurance can come in handy in various other applications and scenarios.
It is also worthwhile to note here that Life Insurance doesn’t only affect your spouse and children. It also provides tangible (and often hefty) benefits to other dependents in your life, such as siblings or parents.
They might not entirely depend on you financially, but they might stand to inherit property or assets that you leave behind. Life Insurance comes in to lighten a big financial load there, too.
Here are four big reasons why single people should be covered by Life Insurance policies too:
Potential tax liability protection on inheritance
If you’re leaving behind any property to a sibling, parent, or any other dependent, a Life Insurance policy can help to alleviate the tax burden when they inherit the property.
We worked with a client aged 57, unmarried with no kids and no debt who, on the surface, had no requirement for Life Insurance. But we agreed to put a policy in place solely for this tax protection.
With inheritance tax in the UK set at 40%, a £1 million property would warrant £400,000 in inheritance tax.
Our client wanted to leave her property behind to her brothers and mother but didn’t want to leave them with a big tax bill attached to it. Her Life Insurance policy payout has now been structured to cover that tax amount.
Potential requirement of Critical Illness Cover
Single or married, kids or no kids, we’re all still susceptible to unfortunate health conditions and illnesses. In the face of critical illness, you might be rendered unable to work for a period of time.
Even if you are covered by health insurance and other employment benefits, you’re likely to take a financial hit of some sort. It could be a drop in income over the time you’re away or expensive lifestyle changes and amenities that you might need during and after recovery.
Critical Illness Cover, usually purchased as an add-on to a Life Insurance Policy, can be the hero of the day in those circumstances.
It can be structured to cover any potential loss of income as well as any expenses to cover lifestyle changes, facilities, or services you may need during or after recovery.
Potential Collateral for a Loan
You might not see the value of this in the present moment, but when you need a home loan or a business loan, one of the most common forms of collateral required by financial institutions is a Life Insurance policy.
As much of a sales tactic it might sound like, the reality is that Life Insurance cover is never going to be cheaper tomorrow than it is today. The older you get, the higher those premiums go.
So if you foresee a home or business loan requirement in the near future, then it might be a good idea to find yourself a sounds Life Insurance policy now, rather than wait until you’re asked for it.
Potential change in circumstances
The last and perhaps most universal reason why you might not want to knock Life Insurance off the table is the fact that your circumstances might change.
You might get married, you might have kids, you might find a long-lost sibling or loved one that you want to leave your estate behind to. You might come into a big inheritance yourself that you want to leave behind to someone you love.
Life is unpredictable; I don’t need to convince you of that. Any of these changes in circumstance (and these are but a few possible scenarios), are likely to have you wishing you took the call and went and saw that Life Insurance advisor those years or months ago.
As an Advisor, it is my ethical responsibility and one that I take very seriously, never to sell anyone anything that they don’t necessarily need. With Life Insurance, however, the truth is that there’s a very small percentage that has no use for the cover.
If not now, is it not likely that one of these Life Insurance requirements might pop up for you in the near or far future?
If you don’t have a policy in place, or want to re-evaluate yours, reach out to me for a quick chat to see if you have the cover and protection that you need, whether it’s for yourself, your family, or your business.