Unlike most things, the price of life insurance has actually fallen, with premiums 50% cheaper than they were a decade ago.
Despite that, there is an estimated £2.5trillion life insurance gap in the UK.
People are living longer and pose less risk to life assurance companies, helping to drive premiums down.
Competition between insurers has also helped to lower costs.
Yet, almost one-third of adults in the UK have no life insurance at all.
Do you fall into this category?
Generally, the sole reason for taking out a life insurance policy is to safeguard your family and dependants’ futures after your death.
You, of course, will not gain financially from paying for a policy, so being insured is of considerably more direct concern to those around you than it is to you personally. This should inform your decision as to whether or not it is the right time to take out life insurance.
Not everybody needs life cover, but generally if you have a family and a mortgage you should definitely think about it. Without it, what would happen to your dependants in the event of your death?
Your dependants might not necessarily be children, although this is one of the primary reasons people take out cover.
If you are married or have a partner, they might also need to be protected.
Would they be able to repay the mortgage on their own if you were no longer around?
There are various types of life contracts available.
The most popular type is term assurance. As the name suggests, this runs for a set period (anything from two to 40 years) with a sum assured chosen at the outset.
At the end of the term, assuming no claim has been made, the policy expires with no value.
Should you die during the term, the full benefit is guaranteed to be paid.
The market is very competitive, so you should be able to obtain cover relatively cheaply. For example, a non-smoking man, aged 35, requiring life assurance of £300,000 over 25 years, would pay around £21.70 per month. The same policy for a woman would cost around £17 per month.
Compare this to your house insurance or car insurance and you will see that to protect your family can be inexpensive.
You might also want to consider a family income-benefit policy. Although not as widely available, they are ideal for protecting family.
This type of plan is also a form of term assurance, but is designed to pay a regular income instead of a lump sum. In the event of death, the chosen income benefit is paid out for the remaining years of the policy. As such, the premiums can be lower.
It is worthwhile shopping around for the best deal. Speak to a suitably qualified financial planner. He or she can find the right plan for you and help with additional benefits that can be built in to your plan, such as critical illness cover. Expert help can also ensure that any claim is paid to your chosen beneficiaries quickly and tax-efficiently.
Read more: http://www.pressandjournal.co.uk/Article.aspx/1995354?UserKey=#ixzz14giXF7Fa
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£2.5 TRILLION gap in the UK?!?! Every time someone does a study it seems to get wider and wider, especially as when, as the article suggests, the premiums are getting smaller. Money is tight I know and other insurance payments might come first, but life insurance shouldn’t be one of them. Doubly so with mortgages what they are in the UK, life insurance is a must for security.
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