A man hugging a loved one

The hidden benefits of life insurance

We’ll get the morbid bit out of the way – we’re all going to die one day, that much is inevitable. Although this isn’t a nice thought, life goes on. We may no longer be here, but friends and family will be. And the thought of friends and family being left to deal with your debts as well as their own whilst also facing the grieving process, is far worse. You may be thinking, you can’t put plans in place to help people when a) you’ll no longer be here and b) you don’t know when this will be. But that’s where you’re wrong.


Life insurance protects your heirs from the unknowable and helps them through an otherwise difficult time of loss. Worryingly, one-in-four breadwinners in the UK don’t have life insurance, which could cause serious issues.


If you have any financial responsibilities, whether they’re unpaid loans or providing support for children, relatives or spouses, life insurance should be a consideration. If you don’t think your dependents could cover the bills, rent or mortgage payments after your passing – you need life insurance. In this article, we’ll be taking an in depth look at the hidden benefits of life insurance.


Payouts for those closest to you

When you take out a life insurance policy, you choose a beneficiary who’ll receive a payout – either as a lump sum or a kind of monthly salary – upon your death. There are two main types of policies to choose from: whole life or term-based. We examined which life insurance policies are best for which situations here.



Critical illness cover pays out to you or your family if you die or become terminally ill. Instead of having to find the money themselves (on top of the other financial loss they will suffer when you’re no longer able to work), insurance can pay for the care and treatment you need so your loved ones don’t have to. It could also cover the emotional support needed by grieving relatives to help them through your illness.


Final expenses

Most people don’t want their spouse, parents, or children to have to pay for the ‘luxury’ of a proper goodbye. The cost of a funeral or memorial service can really add up. In fact, the average cost of a funeral is over £4,000!

Already saddled with grief, a life insurance policy that covers funeral expenses will save your dependents a lot of stress and anxiety at a very emotional time.


Replace spouse’s income or duties

Your life insurance could help to pay for all of the duties your partner’s income covered during your life. The simple day-to-day costs of covering the lifestyle they have become accustomed to don’t have to disappear due to your death. In fact, life insurance could pay for the kind of household services that they wouldn’t be able to do if they were previously a stay-at-home husband or wife.

If your partner stayed at home with the children, you’ll now need to pay for childcare. If your partner went out to work, there’ll be a gap where this income used to be. Unfortunately, school uniforms, birthday presents, food, music lessons and the like won’t pay for themselves. Life insurance can ensure your kids are well taken care of and can afford a quality education.


Pay off debts

Paying off remaining funds for luxuries like cars may not be essential, as these can be sold or returned. Things like houses are less dispensable – in addition to providing income to cover everyday living expenses, insurance can cover debts like mortgages so houses don’t need to be sold in order to stay afloat.


Buy a business partner’s shares

If you’re involved in a business partnership, life insurance might facilitate your family buying your share in your company as opposed to having to sell the company. This is just one example of the way that life insurance benefits both your direct family and a further-reaching array of people around you.


Many life insurance policies are exceptionally flexible in terms of adjusting to the policyholder’s needs. The death benefit may be decreased at any time and the premiums may be easily reduced, skipped or increased. When it comes to tax there’s usually no income or capital gains tax to pay on the proceeds of the policy. But unfortunately, the payout could be subject to inheritance tax.


Even if your policy is not required for a number of years, life insurance provides you with peace of mind so you know your family will be financially protected when you’re no longer around. There are also different types of policy available. So you can select one to best suit the current situation of you and your heirs. Whether you’re researching policies or are just considering one at the moment, our team of friendly experts are on hand to help you to gain the most from whichever you choose.

Still not sure if you need life insurance? If you’re unconvinced, read our other post: ‘Life insurance – do I really need it?’


To find out if life insurance is right for you, it’s important to seek out impartial financial advice. Contact the friendly IMC life insurance team to discover which policies would be most beneficial in your situation.

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