Life insurance is a produce that is available to protect your loved ones in the event of your death. It can lessen the financial impact on your family and provide peace of mind for those closest to you. It can be paid out as a tax-free lump sum and can be used to clear debts or pay off your mortgage, for example.
There are many myths about life insurance that are common misconceptions. In this article we’ll seek to debunk these myths and provide countering facts.
Myth 1: I’m too young to need life insurance
Life insurance is often thought to be a protection product for older people. In fact, life insurance is available to anyone over the age of 18. Whilst it’s true that many wait until they have dependents to take life insurance out, it is not a requirement. Life insurance for younger people may not require a large outlay each month. It is calculated based on the likelihood that you’ll pass away during the policy term. For most, a younger age will make you a lower risk to the insurance provider, resulting in lower monthly payments.
Myth 2: Life insurance is just for a household’s highest earner
You may think that if your partner is the highest earner in your home, that life insurance is not for you. Even if you earn significantly less than your partner, you should still consider life insurance protection. Your contribution to your household may not be financial. However a life insurance pay-out may help cover the cost of childcare or extra support within the home, for example, should the worst happen.
Myth 3: Life insurance providers do not pay out
A common misconception is that should a claim need to be made, providers will not pay out. This is simply not the case. As long as the claim is valid, the policy is in date and the information given on the application is accurate, payment will be made.
Myth 4: I have life insurance through my employer so I don’t need separate cover
Some employers offer life insurance as an employee benefit. Before making the decision not to take out additional cover, though, you should ensure the insurance meets your requirements. For example, is your partner covered on the same policy. Often employees are not able to select the level of cover they receive, so this policy may not offer sufficient pay-out for your needs. Should you leave the company offering the protection, you may not be entitled to it anymore. You are able to have more than one active life insurance policy at a time. So it could be fruitful to have an additional protection policy in place. This will remove the need to organise separate cover whilst between jobs.
Myth 5: I do not have any children, so I don’t need life insurance
Having financial dependents, such as children, is a key reason why many choose to take out life insurance. However it is not the only reason you should opt for life insurance. If you have a mortgage and a partner who is the beneficiary in your will, a life insurance pay-out could help them to cover mortgage payments. Even without a mortgage, your beneficiaries could greatly benefit from a lump sum payment after your passing.
Myth 6: I’m fit and healthy so I don’t need life insurance
Life is notoriously unpredictable and things can change in an instant. Whilst you may be fit and healthy, accidents can happen unexpectedly. Life insurance puts provisions in place should the unexpected occur. By preparing for the worst case scenario, you will remove the financial burden from those who are grieving your loss. Life insurance pay-outs can be used to cover mortgage payments or even funeral costs.
Myth 7: Life insurance pay-outs are taxed
It is true that life insurance payments may be subject to Inheritance Tax, depending on the value of your estate. However payments from life insurance policies are exempt from both income tax and Capital Gains tax.
Myth 8: I would have to undertake a medical exam to take out a life insurance protection plan
In most instances, a medical exam is not required as part of the application process. You may be asked some health and lifestyle questions in order to ensure you are offered the right product for your needs. However there are some life insurance providers that do not require any medical information. If asked, it is important to be honest about any medical conditions you have. Withholding information could invalidate your policy resulting in a pay-out not being made in the event of your passing.
How can Bell Mortgage Solutions help you?
The team at Bell Mortgage Solutions are on-hand to help you with your life insurance and other protection product needs. We will ensure that your chosen product fulfils your requirements and provides peace of mind for you and your loved ones. Contact us now to book an appointment.
The information contained within was correct at the time of publication but is subject to change.
Please note: Your home may be repossessed if you do not keep up repayments on your mortgage.
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