Recent research published by FT Adviser confirms that 5.8 million Brits were prompted to consider life insurance thanks to the coronavirus pandemic. That’s around 11% of the adult population, with just under 20% of this figure aged 34 or younger.
An estimated 37% of UK adults currently have – or have thought about getting – life insurance. That leaves around 33 million without any form of cover.
Life insurance myths, and a misunderstanding of the benefits these products offer, could be partly to blame. But life insurance is crucial to minimising financial difficulty and unnecessary stress for your loved ones should the worst happen.
Keep reading to find out about the different options available, plus five reasons why now is the perfect time to put life insurance in place.
You’ll need to pick the right type of insurance for you
There are three main types of life insurance to consider:
- Term insurance policies – a policy that lets you choose both the amount you want to be insured for and the period it covers.
- Family income benefit policies – a decreasing term insurance policy that will pay out a regular monthly income to your beneficiaries.
- Whole-of-life policies – an ongoing policy that will remain in place and pay out whenever you die.
There are benefits and drawbacks to each policy type and there isn’t a “right” one to choose. The choice you make will be unique to your situation, so get in touch if you’d like help making this important decision.
5 reasons to put life insurance in place now
1. You can’t afford not to
If you are the main breadwinner in your household, you will have family members who are financially dependent on you.
You’ll need to consider whether those you leave behind could continue to make mortgage payments or cover essential bills without your regular income.
If the answer is “no”, it is vital that you put cover in place to protect your loved ones from financial hardship should the worst happen.
2. Life insurance protects your loved ones
The payout your family receive on your death could allow them to cover mortgage payments – or even pay off any remaining mortgage – ensuring that your family continue to have a roof over their heads.
Your income might be going to a child’s education fees. Would the loss of your income mean the payments had to stop?
In the long-term, life insurance could help your loved ones stay in the family home and maintain their standard of living without financial worries. Shorter-term cover could allay additional fears at an already emotional and stressful time.
3. Peace of mind
Knowing that your family are going to be financially secure after your death could help to reduce your own concerns about the future. You’ll have peace of mind that your family will be financially secure after you are gone.
This sense of control should allow you to shift your focus elsewhere, onto your career or watching your children grow up.
You can concentrate on living in the present without worrying about what the future might hold.
4. Myths around insurance aren’t true
Insurance and protection policies are arguably among the most misunderstood. This is clear by the number of myths that surround them.
Life insurance doesn’t need to be expensive
Many people believe that life insurance is just too expensive. FTAdviser, however, confirm that the average cost of life insurance is just below £11 for every £100,000 worth of cover.
This is only slightly more than you’ll be paying for monthly subscription services like Spotify or Netflix and yet the payout could be huge.
Protection policies pay out over 98% of the time
Another commonly held belief is that life insurance policies never pay out. Drewberry Insurance conducted a survey of 1,820 workers in 2015 and found that, on average, people believed that life insurance policies only paid out 50% of the time.
However, according to the Association of British Insurers (ABI), 98% of all life insurance, income protection, and critical illness claims were paid out in 2020.
5. Now is better than never
The unexpected can happen at any time.
Life insurance will protect your loved ones from stress and financial hardship in the future while providing peace of mind to you in the present.
If you can’t afford to be without life insurance, then there is no better time to put it in place than now.
Get in touch
If you would like to put life insurance in place but aren’t sure of the right product for you, we can help.
Get in touch and we can take a holistic view of your financial situation, including finding out what cover – if any – you already have, before putting into place the protection you need.