Homebuyers have house insurance and motorists need to have car insurance – despite the fact that the chance of your house suffering significant damage is remote, and that many people never claim on their car insurance. They do of course provide valuable peace of mind. But would we be lining up to buy these products if they weren’t legally required?
Recent research from confused.com suggests that we might not. Life assurance is not legally required for most of us – and as a result, a majority of the UK population doesn’t have any. According to the independent study, only 40 per cent of UK adults have life cover, and 30 per cent consider it too expensive. Not only that, but the research claimed that 10 per cent of people spend more on coffee than they do on life assurance.
On the face of it, this seems surprising. While most houses will never burn down, suffer subsidence, floods or earthquake damage and many cars will survive largely unscathed, all of us are going to die at some stage. If this happens early to someone with a family and dependents, it can cause massive financial hardship on top of the already traumatic emotional stress.
Yet life assurance is basically cheap: indeed, the lowest available rate is around 17p a day – which doesn’t seem much when you consider the security it provides. Even though rates will be higher than that for some people, life assurance still protects the future wellbeing of our loved ones for a remarkably low outlay.
This product can be bought in a range of ways: term assurance covers a set period, and is therefore the cheapest. Whole of life does what it says on the can. Endowment assurance carries an investment element as well as just life cover.
There are also other protection plans, all of which have their uses in certain situations. Critical illness cover pays out after diagnosis of various conditions rather than on death, allowing the money to be used for medical treatment, recuperation, or whatever you wish. Then there are other plans which can offset the risks of being made redundant, being unable to work through illness or accident, and so on.
The precise form and combination of protection planning will depend on your individual circumstances, which are also likely to change over time; so it makes sense to discuss your needs with an Adviser from Cullen Financial Planning.
One thing seems undeniable, though: the protection, security and peace of mind these products can offer are surely worth more than the price of a coffee.