Many people believe that life insurance is expensive, complicated and not for them. Here we shine a light on some of those common myths.
Life insurance is expensive
Some life insurance payments can start from a surprisingly low amount. The amount you pay depends on lots of factors. Your age, health, family history and smoker status. It also depends the type of insurance you choose.
Insurance companies don’t pay out to your family when you die
In 2021, over 99% of Royal London protection insurance claims were paid. That's 84,547 claims paid to customers and families at a difficult time in their lives. Despite this, there is still a misconception that insurance companies don’t pay out. In cases where they don’t, it’s usually due to irregularities at the point of application, for example, downplaying or omitting a medical condition.
Life insurance is a waste of money because you have to keep on paying for life
Life insurance is a protection policy, so it doesn’t have any cash value. Hence, if you stop making payments, you won’t get your money back. Some life insurance providers offer payment holidays, so you may want to consider this if you still want to protect your family but are struggling to make your payments.
Applying for life insurance takes too long and is complicated
Many life insurance providers offer a life insurance calculator on their website. Usually, these calculators can generate a quick quote for you in a few minutes based on the information you provide. More than likely, the quote will be followed up with a call from the provider confirming your details and making sure you're able to make an informed decision. The length of this call varies from person to person.
You cannot take out life insurance if you have a medical condition
With some life insurance plans, for example, over 50s, you don’t necessarily have to declare your medical condition. However, just because you have a medical condition doesn’t mean that you can’t take out life insurance; it’s at the discretion of the life insurance provider.
You don’t need life insurance if you’re single
It’s tempting to think that you don’t need life insurance if you’re single and without dependants. With the average cost of a funeral now in the four-figure mark, when you die, the burden of that cost will fall on your next of kin. That’s why some people take out a small life insurance policy to cover their funerals.
I have to take out life insurance to get a mortgage
No, you don't. However, you may want to consider mortgage life insurance (also known as decreasing life cover), which helps to pay off an outstanding repayment mortgage when you die. A decreasing term policy typically costs less than a level term policy as the amount reduces over time. Your monthly payments to the policy will remain the same throughout the term.
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