Is Life Insurance Worth It?

Is Term Life Insurance Worth It?

Term Life Assurance is a type of life cover that pays out if you pass away within a set term. You choose this term at the policy’s outset, say 25 years, and if you pass away during that term your loved ones receive a payout.

Given Term Assurance lasts for a set period of time, it’s ideal for covering the span of a mortgage or providing cover to your family until your dependents are able to fend for themselves financially.

Having such support in place on yourself may seem the obvious thing to do if you’re the household breadwinner, but it should also be considered by both secondary wage earners and stay-at-home parents / partners.

Even if a non wage-earner passes away, you need to think about the impact it would have on the surviving partner.

They would have to pick up duties and responsibilities such as childcare and housekeeping – or pay someone else to perform them – at the same time as dealing with loss.

Such a situation could severely impact on their ability to earn a wage, so having a Life Insurance payout could make a significant difference.

You can’t rely on the government to take care of your family after your death.

The money they would be entitled to from the state is probably much lower than you’d expect. If you want to provide for your family financially if you pass away, Life Insurance should be a major consideration.

Michael Barrow
Independent Protection Expert at Drewberry

Is Whole of Life Insurance Worth It?

Whole of Life Insurance is distinct from Term Insurance in that it is guaranteed to pay out when you die, whenever that may be, providing you’ve met all the required premium payments and haven’t breached the terms of the policy.

Given that the payout is effectively guaranteed, premiums are typically higher and the sums assured smaller than for Term Insurance.

Such policies are typically used to ensure there are funds available to pay for a funeral, but there can be other valid reasons.

For example, a parent of a disabled child may look for a policy that can pay for care in future years as the child is never expected to become financially dependent.

Meanwhile, Whole of Life Insurance can also be used to pay an inheritance tax bill as this is something that will definitely arise at death.

But potential customers need to be aware that there are numerous downsides to whole of life insurance, and there may be more effective ways to leave money for after they’ve gone.

Do I Need Whole of Life Insurance?

While Whole of Life Insurance certainly has its uses, it may not always be worth it.

For example, self-insuring is the phrase used to describe retaining the money you would have paid out in insurance premiums and, instead, putting the funds into savings and/or investments.

Whole of Life Insurance products are not savings or investment vehicles; inflation will erode the value of the guaranteed lump sum over time and there is no benefit from compound interest (interest paid on interest, a great boon to savers).

Is Adding Critical Illness to Life Insurance Worth It?

Critical Illness Insurance extends the remit of your Life Insurance policy so that it will also pay out in the event of you becoming critically ill as defined by the policy’s terms.

The most common claims on Critical Illness Cover are for cancer, heart attacks and strokes, but most policies will cover around 40 serious illnesses / injuries, including:

• Parkinson’s
• Multiple sclerosis
• Organ failure
• Total, irreversible blindness / deafness
• Loss of limbs
• Cardiomyopathy
• Removal of a lung
• Encephalitis
• Lupus
• Rheumatoid arthritis.

However, there are policies which cover fewer than five critical illnesses and those which cover more than 100, so it’s worth reading the terms and conditions carefully or getting an adviser’s help.

Do I Need Critical Illness Cover?

While many people take out Critical Illness Insurance alongside Life Insurance, especially if there’s a mortgage to protect, you may not always be best served by Critical Illness Cover when it comes to illness protection.

This is because the cover will only pay out in the event of a critical illness and only if that illness is of a severity specified in the policy.

Some of the most common reasons people are off work sick include, for example, mental health problems and musculoskeletal issues such as bad backs.

Such conditions are by no means critical but would nonetheless keep you off work, potentially for quite a while. Yet because they’re not critical, you’d receive no payout from Critical Illness Insurance.

A more appropriate sickness insurance product for your needs may be Income Protection, which is designed to pay out a regular, monthly income (a proportion of your pre-tax earnings) if you can’t work for any medical reason.

Income Protection, because it’s paid monthly, can provide a more manageable way to keep your finances up together than one large lump sum from Critical Illness Insurance.

Ask your adviser whether Critical Illness Cover is worth adding to your Life Insurance or whether you’d potentially be better served by Income Protection.

Sam Barr-Worsfold
Independent Protection Expert at Drewberry

Get Expert Life Insurance Advice

If you’re not sure about whether or not Life Insurance is worth it, why not speak to an adviser?

At Drewberry, the team is trained to recognise the need for Life Insurance and discuss with you whether it will be appropriate for your individual circumstances.

Best of all, all of our insurance advice is provided on a totally fee-free basis, so why not get in touch?

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.

• There is no fee for our service
• We are independent and impartial
  Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
• We’ve got bargaining power on our side
  This allows us to negotiate better premiums for you than you going direct yourself.
• You’ll speak to a dedicated expert from start to finish
  You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
• Benefit from our 5-star service
  We pride ourselves on providing a 5-star service, as can be seen from our 3900 and growing independent client reviews rating us at 4.92 / 5.
• Gain the protection of regulated advice
  You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
• Claims support when you need it the most
  You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.