Six important reasons to get life insurance

Here’s how it can help your family financially when you’re gone

We regularly see the difference having life insurance can make to bereaved families.

So, when our survey of 500 people Footnote [1] whose partner passed away in the last five years showed that, for most families (65%), the partner didn’t have life insurance, we wanted to highlight how having cover could make a big difference, when it really matters Footnote [2].

1. So they’re financially comfortable

The loss of a partner will inevitably impact the family’s finances and affect their level of financial comfort, whether or not they were the main breadwinner. But in our survey, there was a noticeable spilt in confidence levels between those whose partner had life insurance, and those who didn’t have that protection.

Where 69% of families whose partner didn’t have life insurance felt ‘fairly’ or ‘very’ financially comfortable while the partner was alive, this dropped to 33% after they passed away. For those whose partner had life insurance, it fell from 81% to 58%, so the majority still felt financially comfortable.

That’s perhaps because life insurance pays out a tax‐free lump sum if the policyholder dies within the policy term. So financial support in the form of a cash payout could help your loved ones feel financially secure when you’re gone. Our cover also pays out if you’re diagnosed with a terminal illness that meets our definition, and aren’t expected to live longer than 12 months.

2. So they don’t have to move home

If you want to help make sure your family could stay in their home if you pass away within the policy term, without the upheaval of moving, life insurance could help create that safeguard. The payout on a valid claim could help them afford to pay off the mortgage, or keep up with rent payments – and not have to move to a more affordable place to live and change address at a difficult time.

In the survey, a third of people whose partner died in the last five years were no longer living in the same home, with 45% saying they had to move to a smaller or cheaper property, as they couldn’t afford the rent or mortgage.

For those whose partner had no life insurance, more than a half (52%) said they moved for financial reasons.

But where the partner who died had a life insurance policy, they were less likely to move out of the family home, with emotional reasons and a fresh start being the main reason for moving (68%), not stretched finances.

3. So they’re prepared for unexpected costs

In the same survey, married and cohabiting couples who had no life insurance were more vulnerable to financial shock if their partner passed away, compared with those who had life cover. So if an unexpected cost cropped up – things like a car needing work, or a broken washing machine – they’d struggle to afford it, or might need to borrow money.

Asked if they would be able to afford an unexpected expense of £500, a quarter of respondents said they wouldn’t be able to. While only 19% of families where the partner had no life insurance said they could afford it without some hardship, 35% of those whose partner had life cover said they could afford it without adverse effects.

So life insurance can help with more than just regular costs, and staying in the family home. It can help put a family in a better financial position, and make them more able to deal with the kind of unexpected expenses that have a habit of cropping up when you least expect (or need) it.

4. So they don’t have to cut back

As well as potentially moving out of the home, if the finances are hit by the loss of a partner, it can mean the surviving partner has to cut back wherever there’s the opportunity.

Our research shows that if a partner didn’t have life insurance, the surviving partner was more likely to take measures to make up for the loss of income.

Across the board, cost‐cutting measures included cutting non‐essential monthly spending like holidays and entertainment and other luxuries (43%), spending less on food shopping (36%), and even selling personal possessions (25%). It also led to some giving up their car, taking on loans or, for 21%, using credit cards.

While it may not prevent the need for any cutting back, a life insurance payout can go a long way towards maintaining the lifestyle the family had when the partner was alive, without having to resort to difficult sacrifices.

5. So your partner’s work-life balance is a choice

For some, losing their partner might mean they have to reassess hours worked, or change the type of job they have.

In the survey, most people who had a job were paid bereavement leave (79%), and most felt that the time off was enough. But more than two in five (43%) still felt they could have done with more time off immediately after their partner’s death, and this increased to three in five (60%) for bereaved partners in Greater London.

What about after that, though? Almost two in five people (36%) said their partner’s death had an effect on their employment status. That could mean making up for the lost income by taking on more work beyond what they’d ideally do (true for 20%), or changing jobs. But for some that might mean struggling to keep a job and their usual hours of work, and needing to take on less while they go through the grieving process, or perhaps to make it easier to look after young children.

While in a minority, almost a fifth (17%) of people had to give up their jobs, with 15% needing to work fewer hours and 11% changing jobs so they could work more flexibly.

Whatever the reason, it’s easy to see how being more financially stable can mean this kind of immediate change to employment at an already difficult time might be avoided.

6. So you all feel some peace of mind

Having life insurance gives you the comfort of knowing that, if you pass away within the policy term, your loved ones will have a lump sum on a valid claim to help them manage financially – with the mortgage, bills, childcare, or just help to maintain their standard of living. It can help you all plan for the unexpected.

The survey showed that more than four in five people (81%) asked were worried about their current financial situation on losing a partner. Life insurance can go a long way towards helping make sure your loved ones won’t struggle financially, or have extra upheaval from moving, changing jobs or cutting back, when you’re gone.

And it might also be reassuring to know that in 2022, we paid out over £683 million in claims – which was 99.4% of claims we received Footnote [3].

Interested in life insurance?

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