When it comes to life insurance and other kinds of financial protection, there are many common misconceptions. Some people consider it too expensive, or unnecessary. Others believe that they’ll never need it, so put off protecting themselves until it’s too late.
Keep reading to see these myths debunked and discover why financial protection is so important.
Myth #1: It’s too expensive
Many people believe that financial protection is too expensive.
A study by Legal & General asked millennials to guess the typical monthly cost of a life insurance policy to cover a 30-year-old non-smoker with a cash sum of £100,000 for 30 years. The median guess was £23 per month – more than three times more expensive than the actual cost, which is around £7.30.
Protection costs can vary widely but there are plenty of affordable options.
Myth #2: I don’t need it
Another myth about financial protection is that it’s unnecessary.
A useful guide to deciding whether you need protection is to think about your financial commitments. If the worst happened, what would be the effect on these commitments?
If you or your loved ones would struggle to keep up mortgage or rent repayments, or pay bills, now’s the time to put the right protection in place.
Myth #3: I won’t use it
Many people believe they won’t use their insurance. However, as consumers, we purchase protection all the time.
Whether you’re insuring your home, your car, your dog, or even your mobile phone, you are buying peace of mind that you’ll be protected if something goes wrong.
So why wouldn’t you insure your most valuable asset – yourself?
If you think that life insurance is a waste of money, ask yourself these questions:
- Would your loved ones be able to remain in the family home if you died?
- Could your spouse or partner continue to pay monthly bills if you weren’t around?
- Will your children be provided for if you pass away?
Myth #4: Insurers don’t pay claims
This is one of the most common financial protection myths. And it’s also one of the most dangerous. The truth is, approved financial protection products from regulated providers overwhelmingly pay out.
Figures from the Association for British Insurers (ABI) show that, in 2020, 98% of all protection claims were paid out, totalling more than £6 billion.
Myth #5: I don’t need insurance because I don’t have dependants
Just because you’re single and don’t have any dependants doesn’t mean you don’t need financial protection.
If something happens to you, your parents or other family members will need to pay your funeral expenses.
You might also need income protection if an accident or illness stops you from working. Critical illness cover, meanwhile, might help you get back on your feet.
Myth #6: My employment life insurance coverage is enough
Many people believe their company life insurance coverage is sufficient. However, this is often not the case.
Firstly, most employer-provided life insurance policies have very low coverage amounts. They typically pay up to two or three years’ salary, which is unlikely to cover your ongoing expenses and support your family in the event of your death.
Also, you’ll likely only be covered while you’re employed by the company. If you leave your job, your coverage lapses.
You might consider putting your own financial protection in place, in addition to any cover you have through work.
Myth #7: I’m better off investing my money than buying life insurance
Investing your money can be a good way to grow your wealth over time. But it is best suited to a particular goal and a known time frame.
The unexpected can strike at any time and without warning. If you need to access your investments during a market dip, the amount you receive could be lower than you’d hoped.
Myth #8: I won’t get sick
No one likes to think about becoming unwell, but the truth is, it can happen to anyone at any time. You only have to look at the 22 million Covid cases in the UK in the last couple of years to see how ill health can strike. And if you’re not prepared financially, it can be a huge burden on your loved ones.
Financial protection can help to cover medical bills, and ongoing care costs, as well as replace lost income.
Even if you’re healthy now, it’s important to protect your future self.
Get in touch
Financial protection can help you and your loved ones in the event of a sudden illness, accident, or death. It can provide security and peace of mind, knowing that your loved ones will be taken care of if something happens to you.
If you are considering purchasing or reviewing your financial protection, speak to us now.
Email info@lloydosullivan.co.uk or call 020 8941 9779 to see how we can help you.
Please note
Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
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