Waste of Money Life Insurance

Life Insurance is Waste of Money ?

Why Life Insurance is a Waste of Money ?
Top 10 Reasons [2021 UK]

These are collectively some of the top 10 reasons (or excuses) given to me over the years as to “Why Life Insurance is a Waste of Money”

Life Insurance - Waste of Money ?

  1. The Life Insurance Company won’t pay out

The current average UK life insurance industry claims payout is - 99% for whole life insurance and 97% for term life insurance policies.

https://www.abi.org.uk/news/news-articles/2020/05/record-98.3-of-protection-claims-paid-out-in-2019/

Often people will read an article, where any insurance claim has been denied, wether it is for home, life or car insurance. So this excuse is a common one, as all Insurance is about trust and a promise. To avoid being that 1% ‘declined person’ it also relies on yourself to fully disclose your correct personal information at application, to enable the Life Insurance Company to successfully payout.

  1. Cannot afford it  - Too expensive

The typical price of a basic life insurance policy may often start from as little as £1 per week. If you still think that is too expensive and a waste of money - that is usually same price as butter, eggs, milk or bread ie; the basics. Get a quote and check how affordable ( not expensive ) potentially it is. Note: According to an article in the Daily Express, statistically 7/10 self employed UK workers have no life insurance at all.

https://www.express.co.uk/finance/personalfinance/870873/Life-insurance-critical-illness-cover-millions-of-Britons-at-risk-no-cover

  1. I don’t believe in Life Insurance

I believe even if it was free, some people would still not have it. In fact, some Insurers do offer ‘Free Lifecover for New Parents’ for 1 year. Many people just don’t want to think about the stress of their own mortality & death.

https://www.ftadviser.com/protection/2019/03/20/free-life-cover-for-new-parents-is-a-no-brainer/
Life Insurance wasting money ?

  1. The ‘Other Half’ works. The Family will cope. They will Remarry.

Perhaps or Perhaps not. Do you really not care enough for your ‘Other Half’ or Family ? Is there enough savings to even pay for your own funeral, or will they have to get a loan or borrow money ? Do you have a mortgage or debts to repay ? Can the ‘Other Half’ and any family emotionally cope with their grief of your loss and their responsibilities now on a single income ?

Life Insurance Policy Waste of Money ?

  1. No intention of dying just yet. Not made a will either

Answers usually include ‘I am fit and healthy. I have never been in hospital either’. My usual answer is ‘Great, because if you weren’t fit and healthy, then I may have difficulty getting you any life insurance anyway. The best time to get any Life Insurance cover is when you aren’t very ill or dying ie; don’t need it just yet’. I do recommend you get your affairs in order and make a valid will.

https://www.gov.uk/make-will 

Wills and Life Insurance

  1. I am probably uninsurable anyway ( then laughs )

Let Insurers check ’If you are uninsurable’. They will just ask some general health & lifestyle details ie; age, sex, height, weight, current or previous medical conditions and any risky pastimes. So unless you indeed have a hard to insure occupation like James Bond 007, many people do get offered terms.

                              

  1. We have enough in Savings. So we don’t need any thank you

What happens if you earned say £30,000pa;  So over the next 25 years you may earn = £750,000 gross income. You also had a 25 year mortgage for £250,000. Your family could potentially need therefore over £1 million in savings to help cover the lost shortfall if you died, which most people don’t have ! Rather than relying 100% on your savings, why not use just some of your interest or capital to help pay toward the cost of your life insurance policy, thus indirectly protecting any savings. It could be a sensible ‘Back up Plan’.

Life Insurance - Fail to Plan

  1. I am young, free & single, no debts or dependants

Well if that is true, why are you reading this article? Did your parents perhaps suggest it was an ideal time to take out a policy before you get older and it may cost more or then had any major commitments. If so, perhaps critical illness insurance or income protection plan are more suitable to your current situation lifestyle. Contact us for a competitive quote.

https://www.moneyadviceservice.org.uk/en/articles/do-you-need-life-insurance

Life Insurance Policy Waste of Money ?

  1. Life Insurance has no benefit to me if I die. You also get no return

Well that is not strictly true. Most Uk Life Insurance policies do include a terminal illness cover benefit, which means you could get paid out before you die. Many Insurers have a 12 months terminal illness claim period. Alternatively, include some critical illness benefit if this concerns you.

Most Life Insurance is not a return on investment but Peace of Mind return for your family. How do you expect the Insurers to honour a £100,000 risk payout for say £5pm to your family over 20 years and then give you most or all of the money back if you did not claim. They would be out of business, which makes no sense. Most people do not similarly complain about their house or car insurance monthly return costs, which invariably maybe more expensive than their life insurance.

  1.  The Government will help provide  !

Well this is true. You maybe entitled to get some help via UK Bereavement Support Payment (BSP). Dependant upon circumstances, this could be as little as £100pm upto £350pm (2021). However, like all Government benefits there is an eligibility criteria, which means your family may not qualify at all.

https://www.gov.uk/bereavement-support-payment/what-youll-get

I am not sure what you currently earn, but I doubt it is less than £350pm to help look after your family. So, ‘No’ sadly the Government may not really help provide.

Is Life Insurance Policy a Waste of Money ?  Conclusion

You may insure your car, your house, your mobile phone or pet ...Why not more importantly properly insure the person who pays all those bills ‘YOU’

Life Insurance helps pay the bills

These above comments all come from having spent over 25 years in the UK Life Insurance Industry as a Financial Adviser & Life Insurance Broker.

People’s answers given are often from either visiting them in their own home to chat about their Life Insurance needs or just speaking over the phone.

I have also given some valid responses to each answer that I probably have given at the time and since. These 10 Reasons are in no particular order, as they say on TV.

Life Insurance is a Waste of Money ?

I hope you found this article on Life Insurance a Waste of Money ?  interesting & thought provoking.


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Take care of yourself and loved ones

Martyn Spencer | Financial Adviser @ Uk Life Insurance Quotes

 

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