The majority of Brits don’t have life insurance: what are its benefits, and should you consider taking out protection?


mature couple browses their finances

If you were to die unexpectedly, having guaranteed funds to pass on to your loved ones can be a great way to help them become more financially secure or reduce any debts they may have.

Despite this, only 63% of Brits have a life insurance policy, with most of this group arguing that it is too expensive, according to research by Direct Line and published by Money Marketing in October.

It’s quite possible you may have some misunderstanding about the various benefits of life insurance and its affordability. 

So, find out some of the useful ways life insurance could help you and why you should consider having cover.

The cost of your streaming subscriptions could cover your life insurance’s monthly fee

While almost two-thirds of Brits don’t have life insurance, over half of this group claim that the costs are too high. 

However, when considering that 42% of people admitted to not knowing how much the protection costs, according to Money Marketing, it seems that there may be some misconceptions to clear up.

For starters, life insurance is likely not as expensive as you consider it to be. Unbiased explains how cover can start from as little as £5.83 a month.

This is less than the monthly subscription price of most, if not all, popular streaming services. In fact, figures from Money Marketing show that 71% of people pay for streaming services, which is close to double the amount reported to have life insurance.

In the same survey, it was found that households are willing to spend an average of £25 on streaming services each month. So, it’s worth considering if you really need all the subscriptions you have and which you could manage without.

If you can afford subscriptions such as Spotify, Netflix, or Amazon Prime, you can likely afford protection. When considering the possibility of reducing your family’s debt or paying off their loans when you pass away, the benefits of life insurance, as opposed to streaming, may become clear.

The benefits may exceed your expectations – you could help to pay any of your family’s debt

While the price of life insurance is an important factor to consider, you may not want to disregard its benefits by getting caught up in the cost.

Life insurance pays a lump sum to your family members or beneficiaries when you die, as long as your protection is valid and still covers you at the time of your death. Under these conditions, your family members or beneficiaries are guaranteed to receive the payout.

This presents life insurance as a useful option for both you and your family, as it can sometimes be hard to save a large, lump sum throughout your life. 

So, by taking out life insurance, you can save in order for your family to receive a large, singular payment. Meanwhile, you may not even notice the payments as you make them.

On the other hand, your family could receive the payout through monthly payments in the form of family income benefit. This way, if budgeting is an issue for your beneficiaries, they can receive a consistent income to help with their needs when you’re gone.

Sometimes, family members can be affected by the various costs of your death, like a funeral or losing the household’s main income, which can often be sufficient motivation to purchase protection.

In fact, according to the report from Money Marketing, people’s reasoning for life insurance is fairly evenly dispersed:

  • 33% take out cover to pay for death and funeral costs 
  • 32% take out cover to financially take care of loved ones
  • 28% take out cover to pay off mortgages and other debts.

Assessing your lifestyle and monthly expenses can often be the first step in deciding if you can purchase life insurance

When wondering if you can afford life insurance, it’s important to calculate your monthly costs while also factoring in your lifestyle.

You should firstly consider calculating your recurring discretionary and non-discretionary expenses. This can often give you a rough idea of how much money you have left over each month, helping you to gauge which type of protection may be best for you.

As well as this, the cost of life insurance will vary depending on your age, lifestyle, medical history, and occupation, among other factors. This can mean that, the longer you wait and the older you become, the cost of your protection is likely to rise.

So, when you begin the process of creating a life insurance plan, it can often help to shop around and get quotes from various insurers. This can allow you to get a better representation of the options available to you, rather than trusting the terms of one provider.

Speaking to a financial adviser is a useful way to find clarity and discern what type of life insurance you can afford by helping you create a budget, while also helping you better understand the terms of insurance. 

Get in touch

We can help to simplify your budgeting process and discuss the various life insurance options that may be available to you.

Please contact us via email or call 0115 933 8433 to find out more.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.