Do You Have Life Insurance?

05 July 2010

There is a worrying trend in the financial service world of a low take up of life insurance cover for protection purposes.

This type of cover is no longer compulsory when arranging a mortgage as it has been in the past. As a result, some people are putting off the arranging of this valuable cover. Single purchasers may deem it an unnecessary expense while some employers offer life insurance, usually as a multiple of their salary, to employees. It is important however that individuals, couples and families consider and regularly review their protection cover as you never know what is round the corner.

It is worth noting that the cost of life insurance has decreased over the years due principally to the fact we are now living longer and also to the competition between insurers for this type of business.

Life insurance can be used to cover loans, mortgages and family and business protection. Policies can be on a decreasing cover basis, level cover basis or escalating cover and can also offer additional valuable cover for things such as critical illness, waiver of premium benefit (which is like an insurance on your insurance premium!) and also mortgage payments protection cover.

The younger the individual or couple the cheaper is the cost of the premium and these premiums can be guaranteed for the whole term of the policy – life cover tends to be most valuable when you have a family and as you get older so it pays to take out sufficient cover due to the cost at a younger age.

As mentioned earlier our needs change during the course of our life and the level of cover and type of cover should be looked at and adjusted accordingly.

Nowadays there is also a trend away from smoker status to non-smoker status for individuals and it may be that a policy premium can be adjusted downwards for someone who was a smoker at the inception of the plan – again a review can bring these points into the light of day. The other important point to consider about life insurance, particularly when you are younger, is that we tend to suffer more from health problems as we get older and it may be that subsequent life insurance may be more difficult to obtain and more expensive. However, it may still be possible to obtain protection cover at reasonable cost, even for older age groups. As ever, we would recommend that independent advice is sought when looking at life insurance as with other areas of financial advice.
 

For more information or to arrange a financial review, contact our Financial Consultant, Mike Davidson.