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

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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 66% of people aged 18+ in the UK don't have life insurance, which, if they are a breadwinner, potentially leaves their families open to financial problems if they died.

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 in the UK around 450 people die every day from cancer**.
  • 460 people die each day from heart and circulatory diseases***.
  • More than 100 children lose a parent every single day in the UK****.
  • In 2018, UK Insurers paid out £2.9 billion on 35,470 life insurance claims+.

What if you became ill?

It's also worth considering what would happen to your finances and lifestyle if you became seriously ill and were unable to work for a while or had to change career. With one in seven people in the UK (15%) admitting to having no savings at all and a quarter (26%) confirming they could only cope for less than a month financially if they had to rely on their savings to cover their outgoings++, it's important to make sure that you and your family have a financial safety net.

Critical illness cover is different to life insurance and provides a cash lump sum if you are diagnosed with a serious illness such as cancer, heart attack or stroke, during the life of the policy. It can often be taken out alongside life insurance or purchased separately. In 2018, UK Insurers paid out more than £1.1 billion on 16,452 critical illness claims.+.

Steve's Story

Steve was only 52, and on holiday with his wife when he suddenly became seriously ill. He had no previous signs of illness. Unfortunately, medical investigations showed that he needed a quadruple heart bypass. Luckily, Steve and his wife had taken out critical illness cover, so they were able to cover the mortgage payments and other expenses while he recovered. Steve says ‘it was a big shock to the system…….without that money, I would have probably needed to be back at work a lot earlier than I should be…...'

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 was only 47 in 2018, 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 £4,045, 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 2018, UK Insurers paid out on over 97% 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 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*
†Mintel Term Assurance UK, June 2019 report
*Costs based on £ 100,000 of Life Only Level Cover for a single non-smoker, over a term of 25 years. Cost accurate as at 20.12.19.
**Taken from statistics from Cancer Research UK:
***Taken from statistics from the British Heart Foundation
**** Taken from Winston's Wish
+Uk insurers payout taken from Association of British Insurers
++ Yorkshire Building Society Financial Resilience Survey 2019.