Life insurance myths have been allowed to perpetuate for far too long. With this in mind, Laura Richardson considers whether it is possible to debunk a number of life insurance myths to have been allowed to develop to date . . .
Do you know the fact from the myth when it comes to Life Insurance policies? Read on to discover the truth behind 11 popularly held myths about Life Insurance in the UK!
Myth 1: I’m not the highest earner in our household so I don’t need life cover
Even if you are not the main breadwinner, your death could still have a huge financial impact on your household, especially if you are responsible for the care of your children.
Myth 2: I’m young and healthy, I don’t need life cover
Sadly, accidents and unpredictable events happen, and therefore if you have financial dependents, you should consider life insurance.
Myth 3: I have no children so I don’t need life insurance
Even if you don’t have children, it is still advisable to have life insurance. If you have a partner who depends upon your financial contributions to be able to pay a mortgage or household bills, a lump sum pay-out could be crucial. Alternatively, the lump sum pay-out could be used by your loved ones to cover the cost of your funeral.
Myth 4: I must have life insurance if I have a mortgage
It is not a legal requirement to take out a life insurance policy alongside a mortgage, however it is highly advisable to ensure that your financially dependent loved ones will have a way to meet the mortgage payments should the worst happen to you.
Myth 5: I don’t need life insurance because my employer gives me cover
It is important to check the terms of your policy as it may not be adequate to financially compensate your dependents should you die. By taking out an independent policy you can ensure that the level of cover meets your exact requirements.
Myth 6: Insurers don’t pay out or make it too difficult to claim
This is a baffling myth as in fact in 2019 over 98% of life insurance claims were paid out in the UK!
Myth 7: I will be credit checked
Insurance companies do not generally run a credit check when you apply for a life insurance policy. However, if you do not keep up payments your policy will cease to be in effect.
Myth 8: Insurance pay-out is taxed
A life insurance pay-out forms part of your Estate after you die and therefore can be subject to Inheritance Tax. This can easily be avoided by setting up a simple Trust, which also means your chosen beneficiary will receive the pay-out directly after you die, and will not need to wait for the lengthy process of Probate to be completed before they receive the cash sum.
Myth 9: Life insurance will only pay out when I die
Some policies will pay out an amount if you are diagnosed with a terminal illness in order to financially ease what could be an extremely difficult time for you and your family.
Myth 10: I will need to pass a medical check
Unless you have severe existing health issues, you will not usually need a medical check before taking out your policy.
Myth 11: I have pre-existing medical conditions so I won’t be able to get life insurance
Providing you answer the required questions fully honestly, many insurance companies will offer cover for those with existing conditions, however the cost of the policy may be higher.
If you are interested in taking out a life insurance policy, please contact Andrew Douglas Wills & Legal Services. At Andrew Douglas Wills & Legal Services we are proud to work with trusted partners in order to offer a complete life insurance service. Should you choose to consult our expert team of life insurance specialists you will be offered the most cost-effective and beneficial products on the market to ensure your complete peace of mind. Whether in Essex or across the UK, contact us today to arrange your completely free initial consultation.
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