Two-fifths of homeowners are failing to protect their financial wellbeing by not taking out life insurance due to commonly held misunderstandings and concerns about affordability.
Life insurance provides protection to individuals and their dependents in the event of the policyholder’s death, meaning outgoings like mortgages and household bills can be covered.
However, MoneySupermarket found that only 58 per cent of homeowners have life cover, while 40 per cent have avoided taking out a policy.
The top reasons cited by Brits for not taking out life insurance include believing they don’t need it, the cover being too expensive, having an underlying health condition making life insurance difficult or too expensive, or simply not wanting to think about it. Some people said they didn’t buy life cover as ‘insurers never pay out’.
According to MoneySupermarket data, life cover premiums start from as little as £4.36 per month, based on £100,000 worth of cover for a non-smoking 30-year-old for 20 years.
The price comparison site said that the perception that insurers never pay out is not accurate, pointing out that in 2019, a study by the Association of British Insurers found that the percentage of claims paid out by insurers stood at 98.3 per cent.
MoneySupermarket also asked Brits which perks offered by life insurance companies would most likely incentivize them to take out cover. Free activity trackers such as a Garmin, Fitbit or an Apple watch came first as cited by 15 per cent of respondents.
They were followed by discounted gym memberships at 10 per cent, reduced price fresh food subscription services like Hello Fresh, also at 10 per cent, offers on mindfulness and healthy living services at nine per cent, and exercise classes, also at nine per cent. Discounted prices on GP app services that enable you to see a GP through your mobile device were of interest to eight per cent of respondents.
Neal Cross, life insurance expert at MoneySupermarket, said: “It’s not surprising that so many of us don’t have life insurance – for young adults, in particular, it can seem like a strange thing to be thinking about when you’re fit and healthy with your whole life ahead of you.
“However, it’s one of the most important items of financial protection that you’ll ever own and can provide you and your loved ones with peace of mind in the unlikely event that the worst should happen – for example, the outstanding balance on your mortgage could be covered.
“Our research finds that many Brits are being discouraged from taking out life cover because they believe it’s too expensive or that insurers rarely pay out. But neither of these reasons hold true: life insurance starts from as little as £4.36 a month – significantly less than the amount people spend on their streaming services every month – while research finds that the vast majority of insurance claims (as many as 98 per cent) are paid out by providers.
“What’s more, with lots of Brits committing to getting fit this year, many policies come with added benefits that can help you in your journey to becoming a better you. Things like fitness trackers and discounted gym memberships are just some of the perks available which can help offset the cost of paying for these individually at their full market value.”