Life Insurance is probably not the most exciting thing you’ll read today. However, if there are people in your life who depend on you financially, these two words are very important indeed.
You need to ask yourself what would happen if I was no longer around to bring in an income or look after my children? Would my family be able to cope financially? Would my partner manage to keep up with all the mortgage repayments?
If the answer is no, and you care about your family’s well-being, then having a life insurance policy in place is vital. Without one, your family could lose their home at the worst possible moment imaginable.
Yet despite this reality, recent research from Sainsbury’s Life Insurance has revealed that nearly one in two mortgage holders in Britain don’t have their mortgage contributions covered by life insurance. In fact, the findings suggest there are over 7.1 million people with a collective outstanding mortgage balance of £318 billion who have no life insurance to cover this. That’s a staggering amount of people gambling with their families futures.
Youngest are worst
Of course, not everyone needs life insurance. Perhaps unsurprisingly, the Sainsbury’s research revealed that young mortgage holders (18-24 year olds) are the least likely to have life insurance (62% of them don’t). This makes perfect sense, because at that age you’re unlikely to have to support anyone financially, such as a child or a partner.
However, 44% of 25-34 year olds also don’t have life insurance, 32% of 35-44 year olds are also unprotected, and 34% of 45-54 year olds have no cover. These are pretty significant numbers of people who are likely to have a loved one who depends on them financially in one way or another.
If you’re concerned about how much life insurance will cost you, the good news is, it really doesn’t have to be expensive, particularly if you contact me to look for the best deal for you. With premiums for the young starting from as little as £5 a month, there is simply no reason to leave your family unprotected if something happened to you.
And of course, the advantage of taking out a policy when you’re younger is that your premiums will be lower. The simple reason for this is that a claim is more likely to be made under the policy if you’re older because your health is likely to be worse.
If you’re age 20 and you took out a 25-year policy, for example, there’s a good chance you will survive until the end of the policy at the age of 50. But if you’re age 50 and you take out a 25-year policy, although your chances of surviving until the end of the policy are still good, they are lower. So the sooner you take out a policy, the cheaper it will be.
That said, it’s worth bearing in mind that if you’re taking out a policy when you’re older, you may not require your policy to run for as long as 25 years and your outstanding mortgage debt is also likely to be lower – in which case, your total premiums will also be reduced.
Further things to consider
While covering your mortgage costs is important, you might want to take this one step further. After all, even if the mortgage is covered, would your family be able to cope with paying energy bills, food bills, council tax, without you? If you really want to ensure your family will be fully covered, you need to look at covering all your expenditure.
It’s also worth noting that if you’re buying as a couple, a joint policy usually works out to be cheaper than buying to single policies. However, the problem with this is that it won’t give you as much cover as two single policies because it will only pay out once – when the first person dies, leaving the survivor without any cover. On the other hand, two single policies will pay out twice, so you’re effectively getting double the protection, and they rarely cost double the price.
Life Insurance may indeed be a boring term – but it’s a vitally important one