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Is your family protected if you die?

Is your family protected if you die?

Category: Life insurance

Updated: 12/05/2014
First Published: 12/05/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Death tends to be a taboo subject in UK culture, but there are times when we need to bring the inevitable to the forefront and discuss issues surrounding it.

When it comes down to the financial security of your family, it is a must to consider the future and this means facing up to the scariest of subjects. What would happen to your loved ones if you were no longer there to provide for them? Would your family be able to pay the bills? Would they be able to stay in the family house? These are all questions that need to be addressed, and the solution could be an easy one… life insurance.

But it seems that many people are not prepared and, according to a study by AA, only 41% of those surveyed have life insurance in place, with 1 in 12 of those admitting they don't know how much they are covered for. Will it be enough to meet the needs of their family? This needs to be a careful consideration when taking out insurance.

You insure your vehicles, your property and even your mobile phone, so why are so many people overlooking their most important asset – their life? This oversight seems to be even more evident in 35 to 44 years olds, with only 43% having suitable life cover, yet 60% have children under 18 who need providing for and 59% have an outstanding mortgage.

Life insurance is generally taken out to cover an outstanding mortgage to enable your family to remain in their house. There could be nothing worse than losing a loved one, only to then be faced with financial difficulties and potentially lose their home at such a vulnerable time. The cover can also be used to help the family pay future bills, while covering a funeral or paying an inheritance tax bill - 40% on anything in excess of £325,000 - are further uses for the payout.

Those in their 40s and 50s are most likely to have cover in place, but standing at only 57% of those surveyed, the amount is still relatively low. Mark Huggins, director of AA Financial Services, said: "Taking out life insurance may not be front of mind for people who have a new strain on their finances such as a house or a baby. But if you're young and healthy, life insurance can cost just a few pounds a month.

"Whatever your age, life insurance can be a vital lifeline to your family if you're no longer around."

As important as making sure you have a life insurance plan is reviewing the type of cover to ensure it reflects your needs and the requirements of your family. Your situation changes during your life - you may have more children and your income and outgoings could alter over time - and it is these life advancements that make it all the more imperative to review the cover you have. It's easy to top up or take out an additional policy to keep up with your family's requirements.

When taking out life insurance, make sure to compare the premiums on offer. It generally costs more the older you get, but as life insurers compete for business and reduce rates, you can still get a good deal if you shop around. Don't settle for the cheapest deal either as this may not offer the type of cover you need. Take time to research what is on offer, speak to an adviser if need be, and above all make sure your family are secure should the very worst happen.

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.