56% of you have put your children at risk

More than half of you are putting your children at risk. Why?

My family have had more than our share of health scares recently, so even though it's not a cheery topic, the health of my family has been a subject never too far from my thoughts this year.

God forbid anything does happen to me, but if it does I want to know that my family won’t go without as a result. I don’t want them to have to sell my house because they won’t be able to cope with the mortgage. That’s the whole reason I fork out every month for life insurance – to cover the worst case scenario.

Half of us are taking a risk

However, some recent research by Aviva makes for pretty terrifying reading. It found that 56% of Brits with dependent children do not have life insurance or critical illness cover.

In other words, even though your family depends on you financially, more than half of you are gambling that you won’t become seriously ill or die before your children grow up. Effectively, you are saying that you don't care that your surviving family members will then be left to try to manage the bills and the mortgage alone if the worst happens to you.

But that's not true, is it? Unless you are a psychopath who has a strange fetish for articles about life insurance, I'm guessing you do care, don't you? So why are so many of you taking this risk?

The life insurance price myth

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According to the Aviva study, almost half (47%) of those families with no life cover do so because they fear they will not be able to afford it.

What’s staggering about this is that the cost of life insurance actually fell to an eight-year low earlier this year, something Neil Faulkner looked at in depth back in March.

Indeed, for a 35-year old non-smoking man to get £200,000 of cover for 25 years, policies are currently available from just £13.66. Now I know things are tight at the moment, but that £14 a month is hardly going to break the bank, and will give you peace of mind you are protecting your family financially.

Sadly, this issue seems to come more from the perception that life insurance is intrinsically expensive, a perception the insurers clearly need to do more to address.

Either that, or the cost is an excuse - and the real reason is....

Denial

Recent question on this topic

• bsajp3 asks:

  I don't have a partner or any dependents, but I do have a mortgage. Do I need life insurance?

  • 
    SoftwareBear answered "If you don't want to leave your property to anybody ... then you don't really need life..."
  • 
    TheWelshman answered "Hi bsajp3 Thanks for your question! SoftwareBear has some good points here. If you are single..."
  • Read more answers

Another key reason that families give for turning their backs on life insurance is that ‘they don’t want to think about it’ (16% of respondents), while almost one in five believe that the State will step in and protect their loved ones.

Not wanting to think about is just a cop out really. And when you consider that the payout you can expect from the Government is a one-off tax-free Bereavement Payment of £2,000, relying on the State is a pretty bad move.

£2,000 won’t go far - in fact, your family may find it barely covers the cost of your funeral.

Single parents and women

Depressingly, it is single parents who are most likely to skip life insurance – a whopping 75% of single parents don’t have any cover. When you consider that in most cases that parent will be the sole breadwinner, they are taking an even bigger risk by abandoning cover. Remember, it's your children who most need protection - not your partner.

There is also an issue with women and life insurance. AXA this week put out some great research on how women are now more financially important than ever before, with far more now the sole breadwinners and taking responsibility for all sorts of household bills.

However, just a third have life insurance in place, and only a fifth have any critical illness cover. Almost 37% of women opt against such cover because they simply feel they don’t need it.

This is madness! Of course it's true that not everyone needs life insurance, but your gender has nothing to do with it. It’s time for us all to take our heads out of the sand on this one.

It’s easy, particularly in times of economic difficulties, to put the thoughts of what happens to your money after you die to the back of your mind.

But the simple fact is that so long as you have someone who relies on the money you earn each month to help pay the bills, then you need life insurance. It’s as simple as that – it isn’t optional, it’s a necessity.

Three simple steps to life insurance

Here are three simple things to consider when it comes to sorting out life insurance.

Going for joint cover may be cheaper, and seem a simple move, but the cover finishes after the first death. So if you die, your partner is then left with no cover of their own. By that time it may be far more expensive for them to get cover, because they are older or have more pre-existing health conditions, so it can cost more in the long run.

How much cover?

An important decision this. Do you just want enough cover to pay off the mortgage should you pass away? Or do you want some cash to be left over afterwards? If you just want to pay off the mortgage, the decreasing term assurance may be your best bet – the amount paid out decreases over time, as the cost of the mortgage gets smaller. (This is only a viable option if you have a repayment mortgage.) If you want a set lump sum to be paid out, no matter when you die, then level term assurance is a better choice.

It's also well worth considering critical illness cover and income protection. Critical illness cover pays out out if you develop a critical illness, while good income protection policies will pay you a tax-free income if you fall ill or become disabled, to the extent that you cannot carry out your current occupation. To find out more, read: Three essential ways to protect your family

Length of cover?

How long do you want to be covered for? Some live by the rule that you should be covered until your youngest child has finished school or university.

For all of these sums, I’d recommend having a go on our life insurance calculator.

Five minutes of your time

If you want to see how much life insurance is likely to cost you, then have a go on the lovemoney.com life insurance engine. It takes only a couple of minutes and a few details and you will be presented with a wide selection of suitable policies. What’s more, our advisers are on hand if you have any questions, so you can pick their brains via instant messager, email or telephone.

Life insurance is a pretty dull, depressing subject. But that doesn’t take away from just how important it is.

More: Tricky insurance loopholes to watch out for | Britain's top life insurer, as voted for by you!