In a society where we insure our homes, our cars, our phones and our pets only 1 in 4 of British breadwinners has life insurance.
Around 8,5 million people are leaving their families vulnerable to financial difficulty if the worst comes to the worst says the Association of British Insurers (ABI).
Expert Kevin Pratt said: “Life insurance is there to help provide for your loved ones when they can no longer rely on your income.
“Anyone with a partner or children who are financially reliant on them should think about life insurance. Avoiding the matter can put loved ones at grave financial risk and it’s worrying to see how many breadwinners – male and female – are doing this,”
Key life stage
Broker Ian Williams said: “Most people start looking for life cover when they reach a key life stage such as marriage, buying a home or having children and starting a family.
“The thought of leaving loved ones in a financial mess should you die unexpectedly is what usually prompts people to arrange this essential form of insurance cover.”
But not everyone does so, as the ABI research pointed out.
The government’s Money Advice Service says: “Not everyone needs life insurance – also known as life cover and death cover – but if your children, partner or other relatives depend on your income to cover the mortgage or other living expenses, then the answer is yes – you probably do want life insurance, since it will help provide for your family in the event of your death.”
The amount of money paid out depends on the regular payments chosen. The higher the monthly premium, the higher the payout, so it’s obvious that when choosing a policy you think carefully about how much your family is likely to need if you are no longer there to support them.
It’s also important to realise that such policies only cover the death of the insured. Being unable to work through a serious accident or illness will not be covered – that needs a different kind of policy.
There are two main types of life policy – term life and whole of life. With term life you are insured for a fixed number of years and there is no lump sum payable at the end if you survive the term.
Whole of life means exactly what it says. The policy will pay out to your nominees no matter how long you live as long as you keep up the premiums.
Do you need it?
The answer is yes if:
- You have dependants (school age children)
- A partner who relies on your income
- A family living in a house whose mortgage you pay
You probably don’t need it if:
- You’re single
- Your partner earns enough for your family to live on if you die
- You’re on a low income and could be eligible for state benefits
But the vital thing to do is to make sure you get proper professional advice on your particular circumstances.
- The cost of your policy will depend on your needs, but you can protect your loved ones from as little as £6 a week.