Life insurance can be the financial buffer which stops a painful bereavement becoming a financial catastrophe. While there’s more to life than money, an effective financial plan recognises the fact that everyday actions have a financial value. To put it another way, if we were left unable to carry out these activities, we’d have to pay someone else to do them for us. Notwithstanding this, however, a third of families in the UK are without life insurance, which raises the question of why.
Lack Of Money
This is the single most obvious reason for people not having cover. In one sense it’s completely understandable. Most people are feeling the squeeze just now and for those who are struggling to make ends meet; it’s tempting to dismiss life insurance as a nice-to-have. It’s all the more tempting for younger people who may think of it as something they can buy “in a few years”. Unfortunately not even younger people are immune to death and when they die the effects can be particularly devastating.
Younger children are the most demanding in practical terms. They effectively need 24/7 supervision, which can place a tremendous strain on a surviving partner. While children require less direct supervision as they age, they have other, less tangible needs. The most obvious of these is for a good education. These needs can be much more challenging to satisfy with only the income of the surviving partner.
Lack Of Confidence
Some people feel deterred from sorting out their financial affairs because they think it will be too complicated. These people are likely to get particular benefit from seeking help from a professional financial adviser. Money can’t buy happiness but lack of money can lead to a lot of misery. This means that most people will benefit hugely from having a financial plan to ensure that they can meet their financial goals over the years. This is more than just exercising good money management on the family finances.
It’s about understanding what’s important in your life, which will vary depending on the life stage you have reached. One constant however is the need to protect what really matters to you, be it your health, your children or your home. While single people who are renting a home and have no dependents may be able to afford to ignore life insurance, for most people with children it’s a must.
Lack Of Clarity
All life insurance products ultimately belong to one of two types. There are life policies, which are open-ended and term-assurance products which are for a fixed period. Notwithstanding this, providers try to differentiate their products in the eyes of the public by customising them to specific markets. They may also offer special deals. All of this can easily confuse customers and put them off taking out life insurance at all.
Fortunately, a provider will be happy to explain exactly what their offerings do and do not provide to help you make an informed decision.
Source: 35% of British families have no financial safety net in place at all to cope with a sudden loss of income according to Legal & General research.