February 18th, 2022

3 clear reasons why everything you know about financial protection is a myth

The Covid-19 pandemic has changed many elements of British life, from the way we work to the way we spend time with loved ones.

You may have been forced to contemplate more carefully how your family would cope in the event of your death.

Despite the substantial number of UK deaths during the Covid-19 crisis, a 2021 survey from FTAdviser revealed that two in five British homeowners have rejected life insurance over myths about its effectiveness.

According to this survey, there are three key misconceptions that deter homeowners from taking out life cover:

  • “Life insurance is too expensive”
  • “I won’t get a payout if I claim”
  • “Cover isn’t worth the hassle”

While these reasons could sound plausible, the data says otherwise.

Read on to find out how these myths can be busted, and why it might be beneficial to invest in life insurance, no matter your circumstances.

1. You could pay less for life insurance than you do for Spotify or Netflix

One common misconception about life insurance is that it is unaffordable. However, a 2019 study by Legal & General found that 9 in 10 millennials overestimate the cost of life insurance.

When asked to guess how much it would cost to insure a 30-year-old non-smoker for £100,000 over 30 years, around a quarter of participants estimated that it would cost more than £50 a month. In reality, it would cost less than £10 a month.

For less than the cost of a Spotify Premium subscription, you could benefit from the peace of mind that, if you were to pass away, your loved ones may be able to stay in your home and remain financially secure without your income. In the face of a worst-case scenario, life cover could make all the difference to your loved ones.

2. The vast majority of life insurance claims are paid

Many Brits believe that insurers will always find a way to wriggle out of a payout. Yet according to the Association of British Insurers (ABI), a massive 99.99% of whole of life claims, and a further 97% of term life insurance claims, were paid in 2020.

With this data in mind, you may feel much safer in the knowledge that your family are almost guaranteed a payout if they claim.

Most refused claims come down to missed information about your health or circumstances, such as a health condition you haven’t declared. So, as long as you include all the correct details when taking out life cover, you should be guaranteed protection.

3. The “it won’t happen to me” excuse is proved wrong by the statistics

The FTAdviser survey shows that 12% of participants claimed they don’t have life insurance because “I don’t want to think about it – it’s too depressing.”

This shows that one dangerous myth is still widely believed: life cover isn’t worth the hassle, because it’s simply too depressing to consider such tragic circumstances.

If you still aren’t sure whether protection is worth the hassle at your age, take a look at the statistics. UK insurer Aviva compiled the number of illness and death cases in three key age brackets over a one-year period.

Here are some key takeaways from the year 2018:

  • More than 6,000 people aged 20 to 34 passed away, and a further 6,800 were diagnosed with cancer.
  • More than 23,000 people aged 35 to 49 passed away, with more than 23,000 cancer diagnoses for this age group.
  • In the 50 to 64 age group, more than 74,000 people were diagnosed with some form of cancer, and a further 64,582 passed away.

What’s more, since these figures were released, the Covid-19 pandemic has taken the lives of more than 150,000 UK citizens. Now more than ever might be a good time to consider taking out life cover.

Get in touch

If you have questions about the type of life insurance that might suit your circumstances, don’t hesitate to get in touch. It is always worth consulting a professional before you take out any kind of protection as we can find the most appropriate cover for you.

Email enquiries@prosserknowles.co.uk or click here to request a callback from one of our advisers.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

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