It’s hard to get people excited about the idea of insurance. It’s one of those things that everybody inevitably needs at some point during their life, but nobody likes paying for. Because you buy it in the hope that you’ll never have to claim on it, paying for an insurance policy can feel like shelling out dead money month after month. There are probably things you’d rather be spending that money on, and so it can be tempting to forget about insuring yourself and spending more on the things you love instead.
While we understand that temptation, we also feel that leaving yourself uninsured is a bad idea for the majority of people. Think about all the things you insure yourself for. Your home is probably insured against accident or theft. Your car is also insured to protect against theft, or liability in the case of an accident. Your valuable goods – such as your laptop or cellphone – may well be insured, too. Some of you will even have insurance for your pets, but not for yourself! Are all these things really more important than your own health and well being? If you’re spending money on insurance for everything other than yourself, how can you be sure you have your priorities in order?
The most recent statistical data available tells us that only sixty percent of Americans have life insurance, and that number is falling all the time. That figure needs addressing. If you think about life insurance payments as wasted money, try to think of it another way. Consider the way that playing online slots works. You know that when you pay money into online slots, it’s more likely that you won’t win than you will. That doesn’t stop you from doing it, though, because you’re also aware that there’s always a chance that UK Slots will pay out on the next spin you take. You don’t know when it might happen – it might be the next time you spin the reels, or it might be fifteen spins from now, but slots wouldn’t exist as a popular hobby if they never paid out at all. Life insurance is the same. Most of the time, you’re making payments and getting nothing back. When it does pay out, though, it’ll be at the precise moment you or your family needs it the most. Online slots are a gamble, and taking out life insurance can feel like gambling with your health, but it’s not as big a gamble as having none at all.
Perhaps the issue that holds many people back is not knowing which type of life insurance to go for. It broadly splits into three varieties, which we’ll explore below.
- Life Insurance
Basic life cover does the job you expect it to do based on its name – it pays out a lump sum to your family, or to your estate, in the event that you pass away during the term of the cover. A typical reason someone may want to take life insurance out is that they have a mortgage that would need to be cleared in the event of death, or they have a dependent child who would need caring for if something were to happen to them. The majority of standard life insurance policies pay out for death, or in the event of a medical condition being diagnosed which will lead to death within twelve months of diagnosis (this is known as terminal illness cover). For healthy people, standard life insurance is comparatively cheap, and will do the basic job of ensuring that your loved ones are provided for if you’re no longer there to provide for them yourself.
- Life Insurance With Critical Or Serious Illness Cover
Standard life insurance pays out of you’re dead or dying, but what happens if you only die a little bit? What happens if you have a serious health problem – say, for example, a heart attack, a stroke, or a severe form of cancer, and survive? You may still be alive, but you may not be able to go back to the job you used to do. You may not be able to work at all. What would happen in those circumstances? Does your employer have an in-work benefit which would pay out to your family? If not, you may prefer to consider life insurance with critical or serious illness cover over standard life insurance. Critical or serious illness cover pays out a lump sum on diagnosis of a serious health condition, even if you go on to make a full recovery from the issue. That means you can focus on your recovery without worrying about how you’ll afford to keep a roof over your head.
- Income Protection
By now, we know that life insurance pays out if you’ve passed away or are about to pass away, and critical or serious illness cover pays out for life-threatening conditions. That doesn’t cover everything that might happen to us over the course of our lives, though. What if we were in a car accident, and broke both of our legs? We’re not dead, so our life insurance wouldn’t pay out. Our life isn’t in danger, and so it’s unlikely that serious or critical illness insurance would pay out either. That’s where Income Protection steps in. Income Protection usually pays out as a monthly payment instead of a lump sum, and is there to cover our essential expenses until we’re back on our feet and able to resume work. That could be for as little as two months, or for the rest of our working lives if necessary. Some income protection plans will also pay out a lump sum to our families in the event that we pass away without getting ill or having an accident first, and so they’re still considered to be a form of life insurance.
People who want to feel wholly and adequately protected will often take out a blend of all three types of insurance to ensure that they’re well provided for in any circumstances. That may not always be possible dependant on budget, but a little cover is better than nothing at all. The only people who aren’t likely to require any cover at all are single people, with no liabilities, no dependents, and no obvious beneficiaries. Even then, they may want to as themselves the question of what happens if an accident or illness stops them from working, and how they would cope financially in those circumstances.
If you’ve been sitting on the fence about sorting out your life insurance, here’s one more thing to consider – it gets more expensive to enter into a life insurance contract as you get older, so the sooner you act, the cheaper it’s likely to be. It’s better to put something in place right now and not have to worry about it ever again than to leave it for too long, and then not be able to take it out after you’ve fallen ill. Speak to your financial adviser, and start a conversation about planning for yourself and your family.
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