One new survey suggests our phones and cats are more important to us than our own lives.
Life insurance is just sixth on the general public’s insurance priority list, according to a poll by MyVoucherCodes, falling behind pet insurance and mobile phone insurance.
More than half (56%) of those surveyed had insurance for their mobile phones, while a third had cover for their pets. By comparison, just a quarter had insured their life.
Here’s the top 10 insurance priority list according to the poll:
- Car insurance
- Home insurance
- Pet insurance
- Mobile phone insurance
- Credit insurance
- Life insurance
- Travel insurance
- Medical insurance
- Contents insurance
- Unemployment insurance
Obviously, the fact that it was a poll conducted with a pretty small sample size means we must not put too much weight into the results, but it certainly suggests that many people have their priorities somewhat skewed when it comes to insurance.
Insuring your life
It’s undoubtedly true that we don’t all need life insurance – it’s only necessary if someone you care about would suffer financially from your passing. However, that’s an awful lot of people – all parents and carers for starters, anyone with a joint mortgage too.
And for those people, it really should be pretty much at the top of the list, certainly above the likes of mobile phone insurance! You want to ensure that should you die, your partner can still pay the mortgage, your children don’t have to go without, that your loved ones only have to deal with your death and not your debts too.
It’s even more bizarre that so many are reticent to take out this important cover when you consider how cheap it is. For a 30-year old non-smoking man to take out a £150,000 level term policy covering him for 30 years, he could get a life insurance policy starting at just £9.20 a month. That’s peanuts in the grand scheme of things.
Different types of cover
What’s more, life insurance comes in a number of different forms, which offer further opportunities to cut how much it will cost, without putting your loved ones’ financial future at risk.
The most expensive tends to be level term assurance. This will give the same payout whether you die in the first year or the last year of the policy, which is why it tends to cost more.
Then there’s decreasing term assurance, which as the name suggests, offers a decreasing level of cover the further you get into the policy. So it’s a good option for people with mortgages, who just want to ensure their policy will pay off the mortgage should they die. And as your cover decreases over time, the repayments tend to be a bit cheaper too.
Alternatively there’s increasing term assurance, where the value of your cover increases over time. This is a way of inflation-proofing the payout.
Guaranteed whole-of-life insurance means that your family will receive a payout whenever you die, rather than just within a specified term of, say, 40 years.
And finally, there’s Family Income Benefit, which can be as much as 35% cheaper than traditional life insurance, and pays out a monthly income to your loved ones rather than a lump sum. This saves them having to make investment decisions when handed over a big chunk of cash after you’ve died.
Your needs change
Even if you have life insurance already, that doesn’t mean you have appropriate life insurance.
After all, the cover you need varies over time. If you’ve moved to a more expensive house, you may need to increase how much cover you have for example. You should also review your situation if you start a family.
Protecting your lifestyle as well as your life
It’s not just life insurance that you should be thinking about though, you also need to consider how to protect your lifestyle.
For example, what would you do if you were too ill to work? How would you cover that fall in your income? That’s where income protection insurance comes in.
And what about if you suffer a serious heart attack, or contract a serious illness, like cancer? There will still be a financial impact, but your life insurance won’t do much to help. Instead, you’d need a critical illness policy.
The fact is that while life insurance is a must for many of us, we are more likely to need to make a claim on critical illness or income protection cover. So don’t fall into the trap of thinking that once you’ve got life insurance, you don’t need to worry about the rest.
Thanks to the Life Dept and Protection Review for their help with this article