Life Insurance: What’s the Cost and Can You Afford Not to Have it?
Insuring your pet VS insuring yourself
We generally just accept that pet insurance comes with owning a pet, especially a dog. When you purchase a new dog or cat one of the first things you arrange is their insurance. You want to make sure you can cover the cost of any medical treatment required during your pet’s lifetime. The cost of this insurance generally starts quite inexpensive and increases with age. For my pet’s health and life insurance, I personally pay £16 a month for my 8 year old Australian Labradoodle, whilst my mother pays around £60 a month for her 4 year old Great Dane!
As a mortgage advisor, part of my job is to also provide my clients with advice on what insurance they should ideally have in place when taking out a mortgage – but because this insurance is not a legal requirement, only around a third of clients chose to put any insurance in place.
How much does life insurance cost?
When calculating life insurance, depending on the amount you choose, you will find that the cost is similar to that of your pet insurance. For example, if I were to look into life insurance today, a healthy woman aged 39, I could get £200,000 of level life insurance cover over a 20 year term with Vitality life and the average life insurance cost per month would be £10.92 (4th November 22).
If you have children or a partner dependent on yourself life insurance is generally a fairly inexpensive way of giving them protection for the future and a way of moving forward if you were to die unexpectedly.
Can you afford not to insure your income?
There are not many of us who can say with certainty that we would be financially secure if we were not well enough to work in our chosen occupation or have the support of our partners.
But compared to life insurance cover, even fewer clients take up income protection recommendations. This provides people with a monthly benefit to cover their mortgage payments and associated living costs if they were unable to work in their own occupation through accident, sickness or disability.
Yes, every insurance comes with a monthly cost and no one wants added expense. However, if we just thought of insurance as an essential like we do the water/gas or electricity bill, classing it as another living expense, then we would all be better off in the long run if life didn’t run smoothly. Now living through COVID should be a lesson in expecting the unexpected!
Following COVID, the NHS is suffering a growing backlog inclusive of operations, cancer waiting lists and GP referrals. In light of this critical illness insurance is another safety net people should put in place if they can afford to do so. This would provide a lump sum benefit to enable you to seek private medical treatment if you were to be diagnosed with a specific critical illness which could in theory save your life.
An insurance cocktail – shaken, not stirred
Perhaps the best way forward would be to determine an affordable monthly budget you could delegate to your insurance needs and see what insurance cocktail could be made to suit your budget. That way, you can combine your life insurance, income protection and critical illness insurance in one place.
This is an approach I have had with several clients in the past to ensure that they are protecting what’s important to them but within an affordable budget that they can afford to live by.