Don't put your head in the sand!
These days, many women of the house are the breadwinners. So it may surprise you to know that many don’t have life insurance in place to help protect their dependents or partner, should they die.
I know that most of us don’t like to think about dying as it is too depressing. In fact, when you look at figures from Brewin Dophin (solicitors) which show two in three people die without a will, it seems like when it comes to passing away, few of us accept that it will ever actually happen. But by putting our heads in the sand, we can leave our families at risk if we don't take out life insurance.
No matter where you live, if you have children, life insurance is crucial. Especially when you consider the fact that one-in-twenty children lose a parent before they are finished full-time education.
But while many of us get some life insurance coverage through our employers, it is usually not enough to provide a safe future for our families.
Even in a two-income family, the loss of either parent would have extremely serious implications. Parents depend on each other in all sorts of ways that go beyond earning an income and paying the bills. In many cases, the surviving parent would have to leave their full-time job in order to care for the kids. Or if they choose to continue to work, the extra childcare needed would become very expensive.
Now, while this seems all very morbid, unfortunately, it’s a grim reality. A parent’s responsibility continues even after death. But there are steps you can take to ensure you family is financially secure.
It certainly isn’t expensive to put this protection in place. For instance, at the moment, a 30-year old woman would pay around £5 a month to get £100,000 of cover for 25 years.
In the past, much like car insurance, women benefited from lower life insurance premiums. Historically, women have paid cheaper rates because they have a longer life expectancy. But this is all about to change when the implementation of EU gender neutral legislation comes into effect on December 21st. This ruling means that insurers will, for the first time ever, remove one of the key considerations when deciding on the premium that a person has to pay: our gender.
Some insurers are already pushing up their premiums. For instance, figures out this week from Consumer Intelligence, show that female life insurance premiums have already increased by up to 20%.
“We are starting to see major brands changing and big differences in pricing across the market,” said Ian Hughes, chief executive of Consumer Intelligence. “This is creating opportunities for some consumers to secure more competitive deals now than will be possible after December 21st, when all providers will have to be entirely gender neutral. Women should act now if they are intending to buy life insurance as everything will change by Christmas.”
But how much cover is enough, and how much does it cost? The amount of life insurance you need depends mainly on your circumstances and what you want to achieve.
The general rule is that it should be enough to pay off any debts when you die and provide money so your partner and any children will be financially secure.
It may be worth considering a mix of cover - some to give you a lump sum and some family income benefit, which will pay a monthly income for the remaining term of the policy.
To cover your mortgage and other debts you need a lump sum payout. Since the mortgage is usually the main part of your debts, this part of the cover is probably only required until the end of the mortgage term.
For this purpose, the cheapest and easiest answer is either a level-term insurance – where the payout remains constant throughout the period of the cover, which is ideal for an interest-only mortgage – or a decreasing-term insurance where the payout will decrease in line with the amount left owing on a repayment mortgage.
If you do not have any children, it may be that paying off debts is all the cover you need and your partner would be able to go out to work and support themselves.
One way couples can increase their levels of protection when it comes to life insurance is to buy two separate policies which only cost about 10% more than a joint policy.
The benefit is that you will get double the amount of cover you would receive from a joint policy and if anything happened to both lives, both policies would pay out, providing double the payout for a similar premium.
With joint life policies, if something happened to one life, the policy ends, leaving the surviving life uninsured. This often happens at an age where the other person is older and may not be in as good health, making the cost of replacing that cover either expensive or impossible.
Whether joint or single life policies, life insurance will never be cheaper for you than it is today, so why wait, let us help you find the right policy for you - today!