We all know that life can be expensive and most of us are busy trying to cut our costs rather than increase them, but there’s one additional expense that you should seriously consider adding to your monthly outgoings.
If you have a family or there are others who depend on you to provide them with financial security then life insurance – or life cover, as it’s sometimes referred to – should play a key part in your financial planning.
This week the price comparison site Finder published figures that paint a disturbing picture about the level of life insurance cover held by UK adults.
According to statistics sourced from, among others, the Association of British Insurers, Royal London, More Than and The Money Charity, half of all mortgages have no life policy attached to them, 8.5 million people are without life insurance and 19% of people who once had a policy have either cancelled it or allowed it to lapse.
Life insurance is one of the oldest types of insurance policy in existence, dating back to the mid-18th Century when it was introduced to give financial help to women and children widowed and orphaned through war.
Since then its purpose has remained more or less unchanged and a policy that’s been properly designed to secure the futures of people close to you can be essential should the worst happen to you.
For many people whose finances are a bit tight, it can be tempting to avoid taking on the additional monthly cost of a life insurance premium and save money – but it’s worth thinking about what the possible risks are if you decide against taking out a policy.
How will your loved ones cope financially without you around? Maybe you have savings and possibly a pension pot that will give them some security in the short or medium term. But what about ongoing costs like mortgage repayments, credit agreements and the monthly household bills for council tax and utilities?
Then there are the one-off costs associated with your death that will have to be met. According to the Money Advice Service, the average cost of a funeral in the UK is around £3,200 for cremation or £4,200 for a burial. On top of that, there’s the cost of probate and any resulting tax liability or outstanding debt that may need to be met.
A life policy can pay out a lump sum to a value of your choosing. Obviously the more you insure your life for, the higher the premium will be. You may choose to insure your life for the duration of your mortgage or you may decide to opt for your policy to run until you reach a specific age.
Again, the longer your policy runs and the older you will be when it expires, the more your premiums will be.
Properly planned, the lump sum your family receives will enable them to live free from financial worry for a reasonable period of time and ensure they can easily meet their ongoing financial commitments.
If you decide that life insurance is a sensible option for you then it’s worth speaking to a professional adviser like Oportfolio to help you decide on the policy that’s best suited to your individual circumstances.
Our friendly team of advisers will be happy to review your current financial needs and identify what your policy will need to provide in order to give you and your family peace of mind, and there’s no obligation to buy a policy we recommend.
Why not get in touch and see how we can help you to provide a more secure future for the people you care about? In the meantime, why not Take a look at our short video guide
Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority
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