Recent studies by both Scottish Widows and Acxiom have revealed some interesting, and occasionally alarming, facts about how we view life insurance. Whilst Scottish Widows may be a well known, trusted and accepted, household name, not many will be so familiar with Acxiom. They are probably the largest database marketing service in the world. In a single year they will process over 50 trillion data transactions and turn it into useful information.
Needless to say it is alarming when both companies come to the same startling conclusions. Whilst 97% of the population have a good understanding of the importance of having life insurance less than half that number actually have insurance. A shocking 56% of Brits don’t have life insurance at all. Alarmingly, of those that have taken out cover, less than 20% will be adequately insured in the event that they make a claim.
When looking at the population as a whole, 23% of individuals said that they simply couldn’t afford to take out life insurance and a further 26% said they felt the cost of critical illness was prohibitive. Yet Scottish Widows reported that 65% of those questioned said broadband was more essential than life insurance and 55% said they would rather pay for their mobile phone instead of pay insurance premiums.
Of course many people think it won’t happen to them and if it does they think they’ll manage somehow. 43% of those surveyed felt confident they would rely on their savings if they couldn’t work. Hopefully they weren’t also in the 58% of those who had no savings to rely on, or had less than £2,500 squirreled away for a rainy day.
There is a myth that insurance policies are a waste of money, they don’t pay out. Another myth is that you wouldn’t be eligible, or the premiums would be extortionate. It would take little more than a phone call to find out that the premiums would most likely not be the huge sums feared and that you could reasonably expect to be accepted for cover. The most surprising statistic for many is that 99% of all life insurance policies do, in fact, pay out when a claim is submitted.
It’s all well and good listing a bunch of statistics illustrating who hasn’t taken life insurance out and why. The more important information lies in understanding why it’s such a tragedy. Consider for a moment that 40% of British families have reported being seriously affected by illness, 2.67 million people are out of work and death is 100% inevitable sooner or later.
With life full of uncertainty, the one thing most people agree on is that, when they pass away, they want the reassurance of knowing that their loved ones are taken care of and can stay in their home. It may feel a little daunting or confusing wading through the offers, quotes, etc. but that needs to be placed into perspective alongside the reality of what your family may have to deal with if anything happened to you.
When faced with the option of paying for broadband connections or mobile phones, where the benefit is instantly available, or faced with paying insurance premiums for an event which, in the case of critical illness or income protection, may never happen, or at the very least one hopes is a long way off in the future, those insurance premiums may seem the least desirable option. We are a society that seeks instant gratification after all.
We are also a society that is saving less and has an uncertain economy ahead of us.
You may think you can’t afford life insurance but when faced with the statistics it might be worth sitting down and considering if you can afford to not have it.
David Nealson is a finance writer and independent journalist who has focused on compiling detailed overviews of the leading insurance companies and the plans they offer. See two of his most recent ones – the life insurance covers of AXA Sun Life and Friends Life .