It has been reported that one in four breadwinners in the UK do not have any life insurance policy in place, which could leave their families open to financial problems should they die unexpectedly. We have uncovered why you may be putting your family at risk if you do not have any cover in place.
Covered through work?
Some people may be covered through schemes at their place of work, with employers often paying out to their staff member’s next of kin should they die whilst in their employment but this is usually only three to four times their salary with the average salary in the UK being £27,600. For those who are self-employed, it is highly recommended to purchase life insurance as they will not receive the same benefits at those working for a large company.
Average mortgage cost
The average outstanding mortgage in the UK is £113k so if three times salary pay-out was made, that would only amount to £82,800 which is over £30k less than needed.
Other household debts
Having life insurance is a necessary requirement but not just for mortgage coverage that is of urgent attention but also personal debt. It has been reported that the average household debt currently stands at a record £13,000, so this combined with the average mortgage is well over £125k. Putting your family members in financial hardship is the last thing you want to do and unless you own your property outright and have no debt whatsoever, getting life insurance cover is a very simple way of covering all the bases and having peace of mind that your family will be provided for should you die unexpectedly.
Legal requirement?
It is not a legal requirement to have life insurance if you do have a large mortgage and unexpectedly pass away without any coverage, the lender/bank would be able to reclaim the remaining loan amount from your personal estate with the property being sold in the process which may leave your family with almost nothing to their name. It is a far more sensible option to take out life insurance, ensuring your family are well looked after.
How long should I get cover for?
Cover lasting the length of the mortgage is the best length to start from unless you are looking for whole of life cover to protect your family after all your debts have been paid off, giving them some financial stability after your passing. Should you live beyond the length of the policy (not whole of life) then you will not be due any money back and will need to create a new policy to cover yourself.
Life expectancy
In 2015 average life expectancy in Britain was 79.6 years for men and 83.1 years for women, according to the latest Office for National Statistics data. It isn’t ideal thinking about ones mortality but using the average life expectancy as a guide, you can make an informed decision about how long your policy should run for.
If you want to try to increase your life expectancy, and after all, who wouldn’t, here are some ways to prolong your life:
- Get more sleep. Conversely too much sleep also has a detrimental effect
- Carry on working as stopping work has been linked to reduced life expectancy
- Stay happy
- Relationship goals - Single people usually live less than married couples
- Having a faith/religion will extend your life expectancy compared to atheists
- Lifestyle – maintain a healthy diet and exercise
What can you do to ensure the best value life insurance?
For any queries or to obtain a quote, please contact Rob and the life insurance team on 01243 219 972 or visit www.payingtoomuch.com/insurance/life-insurance
Sample quotes
|
|
Length of mortgage left |
Mortgage amount |
Monthly L.I premium |
|
35-year-old* |
25 years |
£120,000 |
£7.64pm Level with LV or £5.97pm Reducing with LV |
|
45-year-old** |
20 years |
£100,000 |
£11.62pm Level with L&G or £8.72pm Reducing with L&G |
|
60-year-old*** |
15 years |
£60,000 |
£45.85pm Level with L&G or £30.89pm Reducing with AIG |
*35-year-old is healthy with no medical problems
**45-year-old has a minor medical issue and has 20 years left of mortgage to pay
***60-year-old had heart attack and 15 years of mortgage left to pay
Quotes above are based on non-smokers and I have quoted the cheapest on each individual comparison.
Prices correct 31/07/2017
