Be proactive don't procrastinate

Friday 29 May 2015, 12:00 PM

Ricky Butler
Head of Best Practice , LifeSearch

Most of us don't like to think about death, and it's widely acknowledged that we Brits would rather concentrate on the 'here and now' rather than plan ahead. It is why we often procrastinate when it comes to taking out life insurance, or even worse, don't take it out at all. Often it's only when we experience tragedy or our health fails that we are forced into facing the reality.

It's at this point, while hastily trying to lock the stable door, that you realise that not only has the horse bolted, but you could have bought affordable locks by making a simple phone call. While it is illegal to drive around uninsured, it's the financial impact of having an accident that ensures that all law abiding citizens are getting the best possible insurance that money can buy. Why is it any different for life insurance?

The financial impact is actually far greater, so shouldn't we be pushing for a law that makes it illegal to walk around uninsured? It's almost certainly not the answer, as people will either continue to be uninsured or they'll be forced to make an ill-informed choice; the answer lies simply in there being more information on the subject. This blog explores the different types of cover you should be considering to protect your life, and how they could help you should the worst happen. So rather than lobbying for another law we don't need, you could help simply by sharing this post. It could save your friends and family not only money, but heartache too.

Replacement of Income

Your income is part of the foundation which maintains your family's lifestyle.  The payment of your mortgage or rent will usually be dependent on your income, but very few of us think about how the loss of it would affect our loved ones. Loss of income can cause a major, adverse lifestyle change, including the possibility of having to sell your family home (often at a loss) just to escape the mounting debt from the monthly bills which are no longer affordable.
If you're married (like me) and have a stay-at-home spouse and young children, the loss of your income due to an unexpected passing could have devastating consequences. The proceeds from a life insurance policy could provide an income to allow your family to carry on paying everyday expenses like food and utilities.

Payment of Debt

Close your eyes and imagine for a moment that something happened to you today. How much debt would your family have to deal with? The mortgage? Car finance? Credit cards? The personal loan for that kitchen you both love?  
Without you earning, how much money would be coming into the household? More importantly, where would your family find the money needed to pay off the debt? Savings are of course one solution, but if you have debt then it's unlikely you'll have enough savings to bridge the gap.

Keeping Future Promises

Having life insurance can also help you keep future promises to your dependents, such as funding school fees or a wedding, or even providing a helping hand on the property ladder.

Death and taxes
With house prices continuing to rise and demand outstripping supply, inheritance tax is becoming a concern for many of us. It is no longer simply a tax on the wealthy, with more and more of us falling into the inheritance tax bracket. Life insurance can help to pay any duties due on death.
Be proactive 

Once you understand the true value of purchasing life insurance, it's important to purchase a policy sooner rather than later. It's a general rule that the younger you are, the cheaper the premium is, so purchasing the insurance when you're younger ensures that you lock in that price. It stands to reason that as you get older, the premium increases exponentially in line with your risk of poor health, leaving you at risk of not being able to afford cover at all. By locking in the cover while you're younger, even if you were to encounter a serious health issue later on, you and your loved ones would have the peace of mind that your future financial events would be covered by your life insurance proceeds.