A 2020 survey by EY found that more than half of Brits have no financial protection in place. Millions of parents, mortgage holders, and couples aren’t covered, meaning they could be left in a difficult financial situation if the worst happened.
The last year has shown us what the impact of ill health, redundancy, and even death can have on your loved ones. Losing your job, the diagnosis of a serious condition, or even passing away can have a devastating effect, which is why it’s so vital that you put the right protection in place.
As life insurance experts, we hear five common reasons from customers as to why they don’t have any life insurance – and most of these reasons are based on myths rather than reality. Read on as we bust five common myths about life insurance.
1. It’s too expensive
In a 2020 EY survey, 31% of people without life insurance said that the reason was that it was too expensive.
The truth is that life insurance costs much less than you might imagine. In a recent Legal and General study, nine out of ten people significantly overestimated the cost of £100,000 worth of life cover, over 30 years, for a 30-year-old non-smoker.
The median guess was £23 per month, whereas it actually only costs around a third of that – less than £8 per month – for that level of cover.
Bear in mind that these figures apply to Legal & General only. At I’m Insured, we compare life insurance process from across the market to find the cheapest cover for your needs. We even take less than the standard commission so we can pass on the savings to you.
2. It’s confusing
The EY survey also found that a common reason many people did not have life insurance was because it was confusing. More than a third (34%) believed that life insurance was difficult to understand.
Simple term insurance – a very common type of protection – is actually very simple. All you have to do is decide on the level of cover you want (the ‘sum assured’) and how long you want the cover for.
If you die within the term you selected, the policy will pay out the sum assured to your beneficiaries, as long as you’ve kept up to date with the premiums, and you answered the questions on the application form accurately and honestly. There is no cash value.
As life insurance experts, we’re well place to help you find the right cover for you. We’ll help you every step of the way, from making sure you get the right amount of cover, to finding the best price, and working with insurers if you have pre-existing medical conditions.
So, if you’re not sure about how life insurance works, get in touch with us and we’ll be happy to help.
3. It’s a waste of money
Of those without financial protection, three in ten said they didn’t have cover because they thought it was a ‘waste of money’.
As consumers, we routinely buy insurance all the time. Whether you’re protecting your home, your car, your contents, your pet, or even your mobile phone, insurance is there to provide you with the peace of mind that you won’t be out of pocket if something happens.
If you understand the need to insure your dog, phone, or bicycle, it should be clear why you might need to insure you most valuable asset – yourself.
If you think that life insurance is a waste of money, ask yourself these questions:
- Would your loved ones be able to remain in your family home if you died?
- Could your spouse or partner continue to pay the monthly bills and monthly commitments if you weren’t around?
- Who would provide for your children if you passed away?
If you’d struggle in any of these scenarios, it’s time to think about putting the right protection in place.
4. You don’t trust insurers to pay a claim
In the EY survey, almost half of people (46%) thought life providers would find loopholes to avoid paying out claims.
Clive Allison, UK insurance protection leader at the company who commissioned the research, said: “Covid-19 has shone a spotlight on longstanding challenges around consumer trust and engagement with core insurance products, even though they’re vitally important for many people.
“The perception many consumers have around claims payouts versus actual claims data shows there is a concerning and inaccurate mismatch which urgently needs addressing.”
According to figures released by the Association of British Insurers (ABI) and Group Risk Development, insurers paid out 98.3% of all protection claims in 2019 – a new record.
This included more than £3 billion in life insurance claims paid, equivalent to £15.8 million paid every single day. As far as major insurers are concerned, in 2019:
- LV= paid 98.73% of all life insurance claims, equivalent to a total payout of more than £60 million
- Aviva paid a total of 16,363 life and terminal illness claims, equivalent to 98.6% of claims received
- Legal & General paid 97% of all life insurance claims, equivalent to a total payout of £392.4 million and an average payout of £36,608.
- The truth is that insurers pay the vast majority of life insurance claims. Insurers will typically only ever refuse a claim where:
- You were not completely honest when completing the proposal form. For example, if you smoke and claimed to be a non-smoker, or you failed to divulge a pre-existing medical condition, an insurer may not pay a claim
- A specific definition in the policy terms and conditions is not met. An example would be a life insurance claim for suicide within the first 12 months of a policy (as many policies exclude this).
5. You think you won’t get insurance
If you do have a pre-existing medical condition, or you have recovered from illness in the past, you may think that you won’t be able to get life insurance.
Again, this is a common misconception. Many life insurers are prepared to accept applications from people who have respiratory, mental health, circulatory, or auto-immune conditions and so there is a good chance you will get the cover you need.
It may be that an insurer will increase the premium but, in many cases, it is possible to find an insurer prepared to consider your application.
We have wide experience in helping people get life insurance with pre-existing medical conditions, so get in touch to find out how we can help you.
Compare life insurance online
Life insurance gives you the peace of mind that your loved ones will be financially supported should the worst happen. From repaying the mortgage so they can stay in your home, to paying for funeral expenses, life insurance provides the reassurance that money will be available at an emotional and difficult time.
We work with the UK’s leading insurers to find the right cover at the right price. And you’ll often be surprised that life insurance costs less than you might imagine.
Compare life insurance quotes online or get in touch with us if you have any questions or you’d like to speak to a life insurance expert.
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