Any investment dependent on you dying is always going to be hard to sell. There’s an inherent uneasiness in paying for something while knowing that you’ll never live to reap the rewards. “What’s in it for me?” is a question we get a lot. Well, there’s actually a lot in it for you, as well as your loved ones, depending on the insurance type you opt for.

When the chips are down

Death insurance, like all types of insurance, is essentially a wager. A bet. When you take out death insurance you’re betting on the likelihood of your own death.

Each month, you will throw a few notes down on the roulette wheel of death and hope that the little ball lands nowhere near your chips. If it does, then you (or whoever your beneficiaries are, more appropriately) will receive a payout. It’s as simple – but maybe not as melodramatic – as that.

But the saddest part is that you won’t be around to enjoy the win. However, you can rest in happiness knowing that your family and friends are sorted.

What are the alternatives to death insurance?

There are basically two types of life insurance: ‘term life’ and ‘whole of life’. Term life – literally a term or time period in your life – is what most people are talking about when they say ‘life insurance’. And whole of life – well, use your imagination. Here’s a bit more about them…

Term life

As the name suggests, these are policies that cover you for a fixed period of time, typically ranging from 5 to 25 years. If you die before that time is up, your insurers will pay out to your next of kin. It’s very simple, and the cheaper of the two by a fair bit.

Whole of life

No points for working this one out: whole of life gives you coverage for, you guessed it, the whole of your life. As well as the pay out to your beneficiaries when you die, whole of life policies also have a complex cash-building part which is only really relevant if you’re loaded, if at all.

The endurance in insurance

Whole of life insurance is probably not for most people. It’s expensive and complicated. Even if you are minted, there are plenty of other cheaper investment options. The costs are pretty high and the returns are relatively low. If you’re knee-deep in assets, we’d recommend weighing anchor on the super yacht and heading for more lucrative seas.

Term life insurance, on the other hand, is cheaper and offers much more flexibility. The average person doesn’t have heaps of investments, mega-yachts or mansions to worry about. Most people just want their debts to be paid, their funeral costs covered and financial security for their families and friends. For a relatively small amount each month, you can provide that security (and even invest the difference if you’ve recently been inspired by one of Martin Lewis’s musings.)

Back to the question

While whole of life insurance may be a viable investment for some well-off individuals, it’s not going to be suitable for most people. Even if you have the resources to make it work, there are many clever clogs out there who would argue that your money is probably better off elsewhere.

When it comes to death insurance, there’s none of that hullabaloo. It’s a simple deal with simple costs but can’t really be considered an investment in the strict economic sense.

And what it can’t offer in investments it makes up for in peace of mind. If you’ve got a mortgage, a partner, kids, friends, a charity close to your heart or even an all-consuming desire to be immortalised in bronze, death insurance can be the most cost-effective way to take care of your priorities once you’re out of the picture.

Sure, you won’t see a penny of it but you will spend your remaining days safe in the knowledge that your loved ones are going to be taken care of. And that’s something worth investing in.

Now, you can’t put a price on that… well, actually you can. And we have – click here to take a look for yourself.