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Our guide to buying life insurance

Don’t need life insurance?
Don’t bet your life on it

It’s not something many of us like to think about, but it’s a good idea to have plans in place should the unexpected happen. It’s a sobering statistic that 25% of wage earners in the UK don’t have life insurance. If you’re one of them, or if you didn’t think that you needed it, now might be a good time to think again.

Life insurance is there to provide your family or loved ones with a cash lump sum should the worst happen to you. This could provide them with financial security, or simply help them pay off the mortgage – leaving one less thing to worry about. But, do you really need it, or are you better spending (or saving) your hard-earned cash elsewhere? We’re here to help you make that choice.

Some of the most common reasons people use for not taking out life insurance are:

  • The premiums are too high
  • It won’t happen to me
  • I have no children - so I don’t need it
  • Insurance companies don’t pay out if you make a claim.

Let’s take a look at these in more detail.

The premiums are too high – I can’t afford it, can I?

Most of us would say that there is never enough money coming in to pay for everything, and there are often more immediate needs for your cash, such as the mortgage, rent, bills and other expenses. So it’s not surprising that life insurance might seem like a luxury that a lot of people just can’t afford.

However, life insurance costs more as you get older, so the sooner you take it out, the less it would actually cost you each month – and that cost might be a lot less than you think. What you pay is based on things like your age, whether you smoke, and your overall health. For example, with our provider AIG Life, it would cost a healthy 30 year old £6.43 each month for £100,000 of cover. That’s only around 21p per day! However, if you waited until you’re 40, the monthly cost would increase to £10.42, although this is still only 34p per day.*

It’s also worth considering that your health could deteriorate as you get older, making the cost of cover increase. It’s always easier (and cheaper) to buy life insurance when you’re younger and likely to be healthier.

I’m fit and healthy – I don’t need it, do I?

If you’re in good physical condition now, it’s easy to see why you wouldn’t consider life insurance a priority. However, statistics show that circumstances can quickly change.

It’s a sad fact that 164,000 people die each year from cancer,** 420 people die each day from heart and circulatory diseases,*** and more than 100 children lose a parent every single day in the UK****. In 2017, UK Insurers paid out £2.8 billion on over 35,500 life insurance claims+.

The Facts:

Unfortunately, statistics show that 1 in 2 people born after 1960 will be diagnosed with some form of cancer during their lifetime. **
According to AIG Life, the average age of a critical illness cover claimant on their policies is only 47, so it’s not just older people who are affected.

I have no children – so I don’t need life insurance, do I?

This is not always true. Most people would benefit from taking out life insurance, and if there is anyone who relies on your income, such as a partner or elderly relative, the reality is that you need to think about what would happen if you were no longer around. Do you have enough savings to pay off a mortgage or provide income? You should think about any debts you might have and who would pay these off in your absence. There’s also paying for your funeral, which can be costly in itself – on average around £4,086, so it’s also worth considering whether your loved ones would be able to pay for this without additional support.

Insurance companies don’t pay out if you make a claim, do they?

This is a common misconception. However, in 2016, UK Insurers paid out on 98% of life insurance claims and 92% of critical Illness claims. If all the information you provide is accurate and complete when you take out your policy, rejection of a claim is unlikely (as long as it meets the policy definitions).

Peace of mind where you need it most

We’re all so busy, and sorting out life insurance might seem like an unnecessary task at the bottom of a very long list. However, it’s worth considering how highly you value your own (and your family’s) peace of mind.

In the event of your unexpected death, the cash lump sum provided by a life insurance policy could help your loved ones with:

  • Reducing the stress of worrying about finances at a difficult time
  • Ensuring that life is disrupted financially as little as possible
  • Covering ongoing day to day costs, like bills and other expenses (including funeral costs)
  • Paying off a mortgage, helping your family to stay in their home– it’s estimated that only 50% of households with a mortgage actually have life insurance
  • Paying off any other debts you have, so your loved ones don’t have to take on the responsibility
  • Paying for things in the future, such as university education for your children.

If you want to protect yourself and your loved ones, taking out life insurance could be one of the best decisions you make. Then you can just carry on enjoying life!

Find out more about our life insurance and critical illness cover provided by AIG life

You can also call AIG Life directly on 0330 390 0520*

 

 

*Costs based on £ 100,000 of Life Only Level Cover for a single non-smoker, over a term of 25 years. Costs accurate as at 26.09.18.
**Taken from statistics from Cancer Research UK: https://www.cancerresearchuk.org/health-professional/cancer-statistics/mortality#heading-Zero
***Taken from statistics from the British Heart Foundation
**** Taken from Winston’s Wish
+Uk insurers payout stats: https://www.finder.com/uk/life-insurance-statistics
++ UK savings stats taken from the Association of British Insurers.

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