Life insurance suffers from a peculiar problem. Almost everyone agrees it is sensible, and a great many people still do not have it. Usually that is not down to indifference. It is down to a handful of beliefs that sound reasonable but do not survive contact with the facts. Here are the ones we hear most often.
Myth one: it is too expensive
This is the most common objection, and the most consistently wrong. Research repeatedly finds that people overestimate the cost of life cover by a wide margin, often guessing several times the actual premium for a healthy applicant in their thirties.
The reality is that a straightforward level term policy is frequently one of the smallest lines in a household budget, comparable to a streaming subscription or a weekly coffee habit. The only way to know your number is to get a quote, which takes minutes and costs nothing.
Myth two: I am young and healthy, so I will sort it later
Age and health are precisely what determine your premium. Every year you wait, cover gets a little more expensive. More importantly, if a condition develops in the meantime, it may be excluded, loaded, or make cover harder to obtain.
Buying young is not pessimism. It is locking in the cheapest version of a decision you will probably make eventually anyway.
Myth three: I have cover through work, so I am fine
Death in service benefit is a genuinely valuable perk, but it has three limitations worth knowing:
- It usually ends when the job does. Change employer and the cover typically stops with it.
- It may be smaller than you think. A multiple of salary sounds generous until you set it against a mortgage and years of childcare.
- You do not control it. Your employer can change or withdraw the scheme.
Treat workplace cover as a useful foundation, not the finished building.
Myth four: it is only for homeowners with children
A mortgage is a common trigger for buying cover, but it is not the only reason to have it. Consider whether anyone would face a financial shortfall if you were not here:
- A partner who could not cover the rent alone.
- Adult children or a relative you help support.
- A business partner tied to you by a loan guarantee.
- A family who would need to cover funeral costs and a period of lost income.
Even where there are no dependants, cover can prevent debts and costs landing on the people left behind.
Myth five: a health condition means I cannot get cover
This one stops people before they even ask, which is the real cost. The protection market has moved a long way. Conditions that were once barriers are now routinely underwritten, sometimes at standard rates.
Royal London offers cover designed specifically for people living with diabetes, for example, and many other conditions are assessed individually rather than dismissed. If you have been declined in the past, it is worth asking again, ideally through an adviser who knows which insurers view your condition most favourably.
Myth six: insurers look for reasons not to pay
This is the myth that does the most damage to trust, so let us be direct. In the most recent year we paid 98.4 per cent of protection claims, releasing 821 million pounds to 62,412 customers and their families.
Where claims are not paid, the reason is usually non-disclosure at the application stage rather than a technicality invented later. The lesson is simple and practical: answer every question fully and honestly, including the ones that feel awkward or trivial.
How to get it right in practice
- Work out the shortfall. Outstanding mortgage, other debts, and the annual income your household would lose, multiplied by the years it would be needed.
- Choose the right shape. Level term keeps the sum assured constant. Decreasing term tracks a repayment mortgage. Whole of life pays out whenever you die.
- Consider writing the policy in trust. This can mean the payout goes directly to your beneficiaries, usually faster and potentially outside your estate for inheritance tax.
- Tell someone it exists. A policy nobody knows about is a policy nobody claims on.
- Review it after life events. A new child, a move, a pay rise or a divorce all change the sum you need.
Why our answer is different
Royal London has no shareholders. We are owned by our customers, which means we answer to the people we insure rather than to a share price. That is the whole reason we would rather talk you into the right cover than the largest cover.
Take fifteen minutes this week to get a quote and check what you already have. Most families find the truth is cheaper and simpler than the myth.
This article is for general information and is not personal advice.