A common concern for people considering life insurance is that it’s a waste of money, because if you outlive the policy then you get nothing. Firstly, it is probably a good thing if you outlive your policy – you have been around to enjoy life and support your family. Secondly, for the duration of the policy you were protected, by an insurance contract, that would have paid out if you had passed away. This protection was very real, legally valid, and gave peace of mind during this term.
You do not get a refund if you don’t make a claim, or outlive your life insurance policy. Life insurance works in a similar way to other insurance policies. If you do not claim on your car insurance or house insurance do you expect a refund, or believe it was a waste of money? The only major difference with life insurance is that the terms are usually significantly longer than 12 months and you will not be around to see the benefit of a payout (unless diagnosed with a terminal illness).
Every month you pay your life insurance premium you are paying for time on cover. Just because you do not get something physical back for your money, like access to TV shows to advert-free music, it does not mean you are not getting the benefits of a product. You could view life insurance as a regular subscription product, in the form of a protection insurance contract.
Some life insurance policies also include non-contractual benefits, such as access to video doctors, mental health support, health memberships and retail discounts. There is a cost to providing these benefits which are included within your monthly premium.
If you are looking for guaranteed cover until you die, no matter when this happens, you could consider Whole of Life insurance. So long as you maintain your premiums, your loved ones will get a payout when you eventually pass away. Do note that this is usually considerably more expensive than standard term insurance, based on the same cover amount.