Life Insurance
Life insurance is typically taken out to offer valuable financial protection for your family in the event of your death, upon which a payment is made to your financial beneficiaries, heirs or family members. The extent of this payment will depend on your insured sum and earnings. Life insurance and life assurance may be interlinked in advertisements, though bear in mind the two policies are different. Life assurance is a form of financial protection which is also an investment, as you should always get a pay-out at the end of the term of the policy. Life insurance on the other hand is simply financial protection for your family, avoiding the issue of debt in the event of your death.
According to an article by the Fair Investment Company, the British life insurance industry shrank to almost half the size of the pensions industry last year and according to the Association of British Insurers, less than 50% of UK households hold a life insurance policy.
In their most recent newsletter about this issue, the Association of British Insurers found that 25% of mortgage holders had insufficient life insurance to cover their debt. The ratio of new life insurance policies to new mortgage loans was apparently 68% in 1994, but by 2004 this had dropped by half to 33%.
The absence of mortgage life coverage poses a serious risk for the dependants of homeowners. If banks were to embark on wide scale repossessions as a result of this absence of life insurance, this would impose a risk on their loan books and reputations. The Association of British Insurers also state that one of the main reasons behind the increased gap between mortgage loans and insurance is the emergence of people remortgaging their property to take advantage of equity release through a rise in value, without insuring their borrowing. In their report it was stated that around 63% of new mortgage loans were remortgages or further advances, compared to 34% in 1994. Egg reported at around the same time, that three out of four of these new loan homeowners had no intention of insuring this additional debt. This is particularly worrying if couples are remortgaging their property later in life - towards retirement, given that should anything happen to the breadwinner, the partner would be left with significant debts without the capability of paying the loan back.
Reasons for the downward trend in life insurance take-up include:
* Relaxation in lending policy - increased competition in the mortgage market means that lenders are not forcing life insurance policies on their customers
* High house prices have stretched homebuyers, in particular first time home-buyers, in terms of their mortgage repayments, that the additional costs of a life insurance policy are deemed too expensive
* There are more households with no dependents
If you're interested in researching a life insurance policy, make sure you shop around. UK websites such as moneynet ( life insurance ) provide life insurance and life assurance information guides, as well as providing price comparison research for the different products. In the states, the website LowerMyBills.com also offers a similar service.
Because of the various factors listed above, people have also become less familiar with the term life insurance and without the awareness there is little recognition of the importance of this type of insurance. However as speculation increases that UK households are not coping with their debt, so should the awareness of life insurance as an essential product in the personal finance portfolio.
About Rachel:
Rachel writes for the personal finance blog Cashzilla:
Rachel is a disillusioned, disaffected and broke graduate, exploiting new media for financial therapy. ;-)
E-mail: rachel@positiveinterest.com Phone: 0131 561 2251
Latest News
WAVY-TV | Register your home security system WAVY-TV, VA - Are you using a monitored security alarm system? If you are you're now required to register with the Virginia Beach Police Department. ... |
![]() Washington Post | NFL Role in Burress Incident Scrutinized New York Times, United States - In addition to Ahlerich’s New York staff, the league has contracts with 35 security representatives around the country, including in every city that is home ... Video: Super Bowl Star Suspended NFL Giant Buress Watches Legal Problems Grow Burress posts bail, will appear in court in March |
![]() ABC News | How to Protect Your Home From Burglars ABC News - All she knew was that sometime over a two-week period -- day or night -- Stanton would come out and attempt to penetrate her home's security. ... |
Times Online | Britain’s Parliament Opens With Uproar Over Police Raid New York Times, United States - from almost every corner of the Commons, he said, “An MP endangering national security would be a disgrace; an MP exposing facts about Home Office policy ... UK’s Smith Says Systematic Leaks Led to Police Raid (Update1) Speaker examines email security Timeline: Damian Green affair |
Home Ministry's priority on revamping intelligence network Press Trust of India, India - Union Home Minister P Chidambaram has been holding a series of meetings with National Security Advisor MK Narayanan, Home Secretary Madhukar Gupta and ... Needed: Revamp of national security apparatus Chidambaram promises rapid action Indian security chief resigns over Mumbai attacks |
Infrared Systems survey clarifies homeowners security needs Security Park, UK - Infrared Systems International Inc. has conducted a survey on Home Security Needs in an upscale neighborhood of North Houston. ... |
![]() Sify | US Eyes Plan to Lift Home Sales Wall Street Journal - By DEBORAH SOLOMON and DAMIAN PALETTA WASHINGTON -- The Treasury Department is considering a plan to revitalize the US home market that would push down ... Freddie $1 Billion 5-Year Reopening Sold To Yield 2.861% Concerted government policy helped trigger the financial meltdown ... |
Inaugural Nudge: Leave The Little Guys at Home Washington Post, United States - She said the restrictions were put in place for security -- strollers are made of tubular metal -- and the logistics of searching bags and backpacks, ... |
![]() The Daily Star | Campaign Promises on Ending the War in Iraq Now Muted by Reality New York Times, United States - 31, 2011, date for sending the rest of American troops home that is spelled out in the new agreement between the United States and the Iraqi government. ... Wall Street bailout won’t cut the cost of fighting in Iraq Editorial-Roundup THAT NOISE IS MY HEAD HITTING MY DESK. |
![]() WELT ONLINE | India's top security minister resigns Boston Globe, United States - The security official, Shivraj Patil, the home security minister, became the first senior official in Prime Minister Manmohan Singh's administration to ... Video: India Clears Bodies From Last Mumbai Siege Site India’s home minister resigns over Mumbai attacks Mumbai state head offers to quit |
Resources
-
Sorry Currently Unavailable




