When should I get insurance?
It’s no secret the UK is a time-poor nation. We have ever-growing piles of tasks to be completed.
According to our research, 63% of us admit to feeling weighed down by our to-do lists2, causing tasks to be delayed and fall through the cracks. Getting life insurance was one such task with 42% of respondents to our survey delaying it for over a year3.
For many, the decision to get cover was prompted by major life changes. Here are a few of the main reasons:
1. Buying a new home
Nearly one in four (23%) British respondents who have life cover buy it primarily because they bought a house.
If you die before paying off your mortgage, a partner or family member might have to take over the payments. Mortgage protection helps make sure your loved ones can handle these payments after you're gone.
Decreasing term cover is a type of insurance that helps if you have a repayment mortgage or other sizeable reducing debt. The longer your cover is in place, the less is paid out. This is because your debts are also decreasing, and the policy is there to help cover these payments. The monthly premiums for this type of policy are lower than the same policies with level or increasing cover.
If you have an interest-only mortgage, you might be more interested in a level term policy. This is where payouts are fixed, and the protection is in place for a pre-determined amount of time. The advantage of this kind of cover is that your family’s payout would be the same whether you died a year into your policy or a year before it expired.
2. Getting married
If you've recently become engaged or married, combining families and assets may prompt you to think about financial security. Policies can help you support your partner financially if one of you dies. Nearly one in five people (18%) with cover said they took it out for this reason.
There are different types of policies for newlyweds to explore:
- Choose a single policy which covers just you
- A joint policy covers both partners and is usually cheaper but only pays out once, so the surviving partner would need a new policy
Two single policies pay out on each death and can be simpler if the relationship ends, as a joint policy can't always be split into two single policies. Also, claiming on a joint and then getting a single policy later can be expensive because premiums go up with age.
3. Having children
Having kids was the main reason nearly a third (31%) of people in the UK invested in life insurance, according to our survey. Raising a child is expensive, even before thinking about private school or university costs.
Getting cover can help you continue to contribute to those costs throughout your child’s journey to adulthood, even if you’re no longer here with them. Level and increasing cover are best if you want to leave behind a longer-term financial stability.
4. Planning for a funeral
Life insurance isn’t just for people with new houses or young children. Funerals can cost thousands of pounds and lots of people in their later years don’t want to burden anyone with that cost. Over 50s Life Cover could help contribute to these expenses, with smaller monthly contributions and a guaranteed payout. Unlike term-based policies, there is no fixed length. The cover lasts the rest of your life and pays out upon your death, as long as monthly premiums are paid.
With our Over 50s Life Cover, the payment term is until the policy anniversary on or after your 95th birthday (or until death if sooner). Also, our protected benefit feature means that, if you had to stop paying your monthly premiums early, we'll still pay out at least half of the cover amount on your death (as long as you're at least halfway through the payment term). Read the policy terms and conditions for full details.
5. Inheritance tax
Another reason people may arrange financial protection is inheritance tax. Tax bills can be very high and an insurance policy that covers the tax can help ensure your children can get the figure you wanted to leave them.
Some people choose to put their insurance policy into a trust. Trusts have important legal rules, so you should talk to a lawyer or financial expert before doing this. Once you put your policy in a trust, it's hard to change it, so you need to be sure about your decision. There are different types of trusts, so think about how you want your money to be managed in the future.
6. Getting ahead of future costs
Nearly a quarter (24%) of respondents between 16 and 34 don’t think getting life cover is a priority for them, according to our research. However, insurance is usually cheapest when you’re young and healthy.
By taking out a policy in your younger years, you can benefit from lower monthly premiums when life insurance becomes a higher priority. It’s a forward-thinking approach that can make a real difference to your monthly outgoings.
No matter what stage in life you’re at, there are many benefits to taking out a policy including peace of mind, financial security and a lasting way to safeguard those you love. Read our articles on the benefits of life insurance and what to expect when applying for life insurance for more information.
Get a quote today to see which policy suits you and your loved ones best.
