We have no need for life insurance when we are young as we have nobody depending on our financial well being to survive and nobody who will suffer financially if we should tragically die. However as we get older, get married and build a family, we acquire dependants (people who depend on us financially) and so it is probable that you will want to protect them in the event of your death.
It makes sense to insure the main breadwinner of your family because in the event that you lose them, and then in turn, their income, it will not put financial pressure on the other family members in that traumatic time.
The two main types of cover are life insurance and life assurance (sometimes called term assurance in the USA). With life insurance you pay for a predefined time period and your family then receives a payout if you die, with life assurance, you pay regular premiums for the rest of your life and then your estate receives a return when you die.
If you have young dependants (children) and are a one-income family, then it would be advisable to take out life insurance to cover the period in which your children will be at school as they will be fully dependant on you during this period. When they leave school and get incomes of their own, the need for you to have a high income will decrease, as will their dependence.
What if the worst were to happen and tomorrow morning you get run over by a bus and your income stopped overnight? How would your family cope? Thoughts like this are often what drives people to buy life insurance. It will allow you and your partner peace of mind when the future is never certain.
Life insurance can be relatively a cheap price to pay to protect your family against a major disruption if you should die. The prices can go up in the case of very high earners or if your selected policy contains specific inclusions that mean the premiums are higher, but on the whole, life insurance is very affordable when you consider what could be lost in the event of your uninsured death.
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