Insurance to die for

16 August 2024

Richard Lishman looks at the different options and policies available.

Death is a natural part of life, and covering yourself with life insurance is one of the bleaker aspects of adulthood that need to be considered. 2022 statistics show that, of the 577,160 registered UK deaths, dementia and Alzheimer’s disease was the leading cause of death at 11.4 per cent, and ischaemic heart diseases comprised 13.3 per cent of male deaths. More people are interested in life insurance, with UK revenue currently sitting at £40.3bn.

Unlike some professions, dentists are not contractually obligated to get life insurance. But, anyone with children or someone who is financially dependent on their income should seriously consider it. Thirty per cent of people get life insurance when they become a parent so that their children will have a level of financial security in the event of any serious accident or illness.

Financial security is a major concern in the UK due to the high cost of living. Inflation falling does not mean prices will fall – the record-breaking amount of rain in the last 18 months will likely keep food prices high, for example. In the uncertain times of fluctuating energy and housing prices, life insurance provides the financial stability for your dependents to navigate the ever[1]changing economy if you have passed on.

Decisions, decisions

Whilst the idea of life insurance is simple – you pay monthly premiums or an annual sum to cover your death – there are four different types to know about. Term assurance is one of the cheapest policies and it pays out a lump sum if you die during the policy term. This is commonly held until retirement age and the payment is frequently used to cover outstanding mortgage payments.

A family income assurance provides an income for your family or dependents, but only covers the term remaining on the policy, so additional arrangements may need to be made so that the income is provided after the policy has expired. Whereas the previous two policies are based around a specified time, whole-of-life assurance will cover your entire life, guaranteeing a pay-out to your estate. This policy is usually paid for in monthly premiums and requires medical information.

Finally, an endowment assurance covers your death over a specific term, but it also pays a lump sum if you survive, called the maturity value. Endowment assurances require higher premiums as there is an investment element, but it can be considered as a savings vehicle.

More considerations

After selecting a policy, life insurance companies will offer reviewable premiums or guaranteed premiums. The former is cheaper but the life insurance company will regularly review these and the price will increase over time. Conversely, guaranteed premiums keep the rates to the same initial levels for the duration of the plan, making it easier for you to manage your budget. As would be expected, the initial premium is likely to be more expensive.

Moreover, the level of insurance needed is something to weigh up. Calculating how much money your dependents require for their current lifestyle to continue is a major factor in how much you want to insure your life for. Equally, any debts or outstanding issues need to be covered too. You will also have to choose if the payment is delivered in instalments, like an income, or as a lump sum. So many choices can be overwhelming.

Seeking help

Balancing your busy work and personal life may leave minimal time to consider the many choices in getting life insurance. Hiring a financial adviser, like money4dentists, can help, ensuring that these decisions are made with clarity and confidence. A financial adviser can assist in aligning your priorities, offering their guidance to make sure that your life insurance policy is the most beneficial for you and your dependents.

With life and the economy becoming increasingly uncertain to predict, choosing the right Life Insurance will give your dependents the financial security they need. By doing so, peace of mind is achieved.