Life insurance provides financial reassurance for your family and loved ones in the event of your death. If your family relies on your income, it will give them peace of mind knowing that they will receive a lump sum to pay for mortgage payments and other essential bills.Life insurance is not compulsory by law, but it can be very important if you have a mortgage, spouse or children that depend on your income. In fact, some mortgage providers will insist that you have group life insurance in place when applying for a loan.According to industry data compiled by Group Risk Development (GRiD), group life insurance policies paid out total benefits to the value of £1.69bn in 2023 – an increase of £160.9m over 2022. The average life insurance payout was £137,448.When do you need life insurance?If you have a mortgage – Your mortgage is likely to be the largest expense that you owe and in the event of your passing, your life insurance should be able to cover your outstanding mortgage repayments.This means that your loved ones are protected and do not have the risk of being uprooted or forced to move home during a time that is already going to be very difficult and emotional. There are also terminal life insurance policies that will pay off your mortgage debts while you are still alive if you are diagnosed with a terminal illness.You have children – Your life cover should be able to support your children financially, including their home, childcare, food and school fees. Making sure that your children, especially if they are young, have sufficient funds to pay for basic necessities and education is a good reason to have life insurance in place.You have a partner who relies on your income – If you are the sole or main breadwinner, your life cover can continue to pay for your family's financial support, including mortgage, accommodation, household bills and other essentials.To pay for your funeral – Funeral costs are rising. According to SunLife’s Cost of Dying Report 2024, the total cost of a person’s send-off in 2023 – including professional fees, a basic funeral service, and optional extras like the party or wake – has risen 5% from 2022 to £9,658. Rather than leave this burden on your loved ones, life insurance policies will usually have provisions in place to pay for part or all of your funeral expenses.Who does not need life insurance?There are a lot of good reasons for every person in the UK to have some sort of life insurance in place. However, there are some instances where having no life insurance may be a better option.The elderly (some, not all) – For those aged 65+, perhaps with no children to support financially or mortgage to pay, and who have medical conditions, it may be more cost-effective to have no life insurance in place. Whilst a pay-out may help out their spouse once they pass, they may not need this if they are financially secure. Equally, life insurance payouts are subject to inheritance tax, so it may not be worth putting money in a trust for your beneficiaries.Single and no children – If you are single, with no children and no property, there is potentially nowhere for your payout to go once you die or any bills to cover. In which case, there may not be a need to have a life cover in place.Your partner has a large income – If you are financially secure due to having a spouse with a very large income and any payments for your mortgage and children are covered, you may not require life insurance. However, it might be valuable for at least your spouse to have a good policy in place.Those on state benefits – For those on government benefits who are not receiving a regular income or don't have any valuable assets, life insurance cover would offer a very limited payout.Very young people – Young people who are still dependent on their parents and not yet earning an income (e.g students), may not benefit from nor have an incentive to apply for life insurance – although their parents would certainly benefit from having some cover in place.