What will happen if I don’t buy life insurance?
We get asked what will happen if you don’t buy life insurance all the time, so we’ve come up with a couple of examples of typical families, and the problems they would face if they didn’t have life insurance and the worst happened.
A married couple, both aged 27 have a one year old son and a new baby on the way. They both earn around £25,000 and have a £150,000 mortgage which they pay between them. Life insurance would cost just £30 a month for this couple, but they have decided not to have life insurance. Two years after having their second child, the wife is killed in a car accident and the husband is left with a huge mortgage, two children to look after and half of the income they previously had.
In this situation, the husband would also have to pay for additional child care for the two children at the times his wife would have had them, as well as facing having to pay a mortgage and to live on just his salary, where before he would have had an extra £1,600 a month to live off.
In most situations the family would have to move home, as they wouldn’t be able to afford the mortgage, adding to the grief and upheaval in the families lives.
A couple have a daughter aged three, and live in rented accommodation. The father is 25 and the mother just 20. Neither have life insurance because they’ve never been offered it, and hadn’t really thought about it before. The father earns around £20,000 and the mother works part time in the evening when she’s not looking after the children. She earns around £8,000 a year, nearly all of which she takes home thanks to the tax free allowance increase.
The father then dies, leaving the mother with a child to raise, the prospect of having to pay the rent on her own, and for child care during the day if she goes out to work fulltime again.
Again this family are likely to lose their home through not being able to afford it.
Buying life insurance could have made a huge difference to the financial stability of both families lives when the worst happened.