If you are the sole or main breadwinner of your family, not taking out a life insurance policy can leave the future of your family at risk.
Life Insurance is an agreement entered into by an insurance company and an individual. Under the terms of the agreement, the insurance company promises to pay the family of the insured a pre-decided sum in the event of the insured’s death. The insurer pays out the claim against the premiums paid by the insured during their lifetime.
Here, we are going to take you through 7 unbelievable, but true, statistics and facts that will tell you why citizens of the United Kingdom need to have a life insurance policy.
Life Insurance is a Subsidiary of Protection Insurance
Life Insurance, in the UK, falls under the category of Protection Insurance which also includes Income Protection Insurance and Critical Illness Insurance.
According to a survey conducted in the year 2018, there are over 25.2 million Protection Insurance policies in the country. Out of these, 535,000 policies are collective insurance policies.
In 2017 alone, more than 2.1 million collective and individual life insurance policies were taken out. Plus, in some form or the other, these group insurance policies cover 12.1 million people.
Collective insurance or group insurance policies are usually taken out by the employers and heads of organizations to cover the life of their employees. This is done to cover the workmen compensation funds and sick pay in case the employee meets an accident or encounters a serious illness.
Group insurance policy gives the organisations greater bargaining power when purchasing insurance and helps them keep the employees afloat when in need.
One can buy group insurance for covering the lives, health, and any other type of personal insurance for its employees.
Insurance Providers in the UK
When you are considering taking out a life insurance policy, the first thing you might want to do is approach an authorised insurance provider. Well, this might not pose a problem for you because there are 357 authorised life insurance providers in the country!
Is UK Prepared to Handle Financial Uncertainties?
When you have a substantial mortgage which you are repaying with your income, have you ever wondered who is going to take the responsibility when you are no longer around? If only you could take your debts with you.
Well, while you cannot do anything about leaving with debts lingering on your family, you can always provide for the repayment of these debts through life insurance.
When you purchase a house on mortgage, you can take out a decreasing-term life insurance to cover the debt for you if you are dead without repaying it. This will protect your family’s right to live in the family home without lenders harassing them to repay.
The statistics show that only 50% mortgaged houses are backed by life insurance in the UK. The total number of houses on mortgage being 11.1 million households, you can only imagine the number of households who might have to quit their homes once they are not able to afford the interest.
Moreover, more than 42% of people who have mortgaged their estate or any other asset have no life insurance to cover their families.
The Cost of Living of an Average Household in the UK
An average British household spends over 18,000 GBP annually on utility bills and other expenses. Plus, the food expenses of each similar household can amount up to 2,770 Euros in a year.
Now, with these staggering living expenses, your family will end up with little means for living a respectable life if there is no life insurance supporting them. If you are relying on the state benefits and your savings to last them a lifetime, think again.
It is Not Just the Living Expenses that will Take a Toll on your Family
Apart from losing you from their lives and your financial support, your family might run out of savings too because of the whopping funeral expenses. Yes, since 2004, the costs of organising funerals and burials have doubled, making life insurance a wise choice.
Also, when they inherit your estate, your children will have to pay an eye-watering amount of Estate Tax, which will again drain all their savings and force them to take a loan. However, if you have taken out a life insurance in time, you can protect your family’s financial stability by providing them the sum they need to start over.
You can trust Life Insurance Policy Payouts
When taking out the policy, you might be a little apprehensive about receiving the payouts. However, you need not worry because as many as 98% life insurance policy claims were cleared in 2018, the stats of rest of the years being no different.
In 2016 alone, 12.5 million Euros worth of insurance was paid out every day. More than 138,000 individuals in the country received these compensations.
The Number of People taking Out Life Insurance is Decreasing
As compared to 2014, the number of life insurance policies taken out in 2017 has decreased by 1 Million.
The above figure can be worrisome because more than 8.2 Million people in the country have no life insurance to provide them a financial cushion. Also, there are about 19% of past life insurance users who have taken out the claims once but no longer want to engage in the process. This can be an indication of a troublesome experience or high-rising premium rates.
We have used dependable data published by authentic websites in this article to give you a clear picture of the Life Insurance scenario in the UK.
The Bottom Line
In conclusion, Life Insurance is not a policy that promises to indemnify the loss of life but it tries to indemnify the lost income. What you receive from the policy, as insured, is the peace of mind and life-long financial security of your loved ones.