Some life insurance is necessary. If you have a mortgage, then your lender will insist that you have life insurance to pay off the mortgage and therefore this will not be a waste of money. It will also be useful for your family if you do die, that this loan will be paid off. However, many other types of life insurance may not be so useful.
Return is small
The return on life insurance is often small compared to what you pay in. You could find that you are paying in for a long time but what you get back is not that much. Figure out how long you will have to pay in to get your money back and how long you are likely to live in order to calculate if it is worthwhile.
Saving could be better
Once you have done the above calculations, you could find that saving will be better. If you only have to save up each month for a small amount of time to amount what you will get paid out in the insurance, you should do that instead. It may be harder to be so self-disciplined, but you could set up a direct debit to a savings account each month in the same way that you would to insurance.
Prepay funeral instead
Some people have insurance because they are worried about the funeral costs. It could be cheaper to prepay for a funeral instead. Many funeral companies offer this service and you can have peace of mind that your family ill not have to worry about that expense. This is likely to be better value for money than life insurance, but it is worth comparing the two first.
Health problems Make it Expensive
If you have health problems then life insurance is a lot more expensive. This is because the chances of you dying are greater and therefore they want to make sure you have paid in more than is taken out after you die. If you smoke, this will also put up the premium and so it could be even more worthwhile saving money each month rather than paying in. It will be up to you to decide what risk you think you are and how close to death. If you think you will live for longer than it will take to save up the amount of insurance pay out you require then save instead.
Lots of Fees
When you take out insurance there are various fees that have to be covered. That is why you usually cannot make a claim within a certain time period as you have to cover these costs first. These fees are what can mean that the life insurance is less value for money than a savings account. Look carefully at the fees, especially if you are decided on taking out life insurance and get the best deal that you can.