Is life insurance enough for your needs?

At some time in our lives many of us will take out an insurance policy to protect our family and, for most, it will be life insurance to protect them if the worst comes to the worst.

But is that really enough to cover all eventualities?


New research shows that consumers who take out life insurance are less likely to look at other forms of cover, even if it leaves their family exposed if something goes wrong.

A survey carried out by Cirencester Friendly Society found that individuals with life cover and critical illness insurance did not consider income protection ‘even though the policies are very different’.


Income protection is designed to cover your salary if you can’t work because of illness or injury and pays out monthly rather than a lump sum payment.

Life insurance pays out for your dependents when you die and critical illness pays a lump sum if you receive a diagnosis for an illness appearing on a pre-agreed list.


David Macgregor of Cirencester Friendly Society said: “I believe it is a combination of both confusion over the product and the cost issue, plus a question of priorities and an element of ‘it won’t happen to me’.

“Customers can easily relate to a potential critical illness claim, as most will know somebody who has suffered a heart attack or stroke or been diagnosed with cancer.”


But what happens if your condition is not on the critical list?
Said Mr Macgregor: “Whilst we do see and pay claims for these illnesses, in 2018 we paid over 38 per cent of our claims as a direct result of an accident, 7.9 per cent for mental health and 13 per cent for musculoskeletal-related conditions, such as bad backs and joints.

“Generally speaking, these conditions would not be paid under a critical illness policy, which clearly highlights the need for cover under both to ensure complete protection and peace of mind.”

Is it worth it for you?

The Association of British Insurers (ABI) says around a million people a year find themselves unable to work because of injury or sickness, cases in which case income protection would pay out until you are able to return to work.

It doesn’t pay a lump sum. Instead it pays up to 80% of your monthly salary until you go back to work or retire.


But you may not need it if you have sufficient savings or your partner earns enough to cover the bills.

It’s also worth checking whether or not your employer offers it as an employee benefit.


Protection advisor Luke Cavendish said: “Ask yourself a question – before you retire do you think you are more likely to die, be diagnosed with a critical illness, or suffer an illness or injury that prevents you from working for a few months or longer?

“The answer for most is the latter. It could be for a short period of time, or in the worst case you may never be able to work again.

“Whilst income protection is an insurance cover taken out by so few, it’s absolutely the most likely to be claimed upon.”