Life Insurance is it Too Expensive to Have in a Recession?
Life insurance may look like an unnecessary expenditure in the current economic climate but now more than ever is it important for consumers to think about it, it has been reported. In an article in my finances, Daniel Barnes makes the case for considering protection by highlighting the fact that consumers can opt for cheaper types of cover instead of cutting it altogether.
Cancelling cover is “a drastic move” that consumers need to critically think about before going ahead, according to Matt Morris, senior policy adviser at broker Life Search. Advising against cancelling a life insurance policy, the expert is quoted by the publication as saying “you are leaving yourself vulnerable as there will be no payout if something happens”.
The view is shared by Aviva’s chief underwriter Michael Whyte, who said consumers need to take a broader and long-term view because a snap decision now may end up being costly in future if a person’s life changes. Consumers considering cutting their costs should therefore shop around for a better deal that may see them pay lower premiums but still be protected against any eventuality.
The experts’ views were made in the wake of recent research from the Association of British Insurers showing that over the last year 13 per cent of people have cancelled their life insurance due to the harsh economic conditions.
In recent years the costs for life insurance have been reduced as mortality rates decline insurance companies have reduced their charges for new polices but not for existing policy holders. Many people you cancel the plans do not replace this cover with a new policy as they feel they cannot afford it. However if they just looked at what life cover they could get for what they could afford each month they see that they could get more cover than the realised.
Where can I get a good life cover quote?
In these days of recession there are many life insurance brokers on the internet who offer discounted life insurance premiums, but what does this mean. When a life insurance policy is set up by an insurance broker or even directly with an insurance company a commission or set up fee is charged to your policy. This commission is paid to the company that sets up your policy and pays for the process of advising you of your options and the time the advisor takes to get you policy accepted. Even if you go direct to the insurance company they will have a department that will have to do the same thing so the commission or set up fee is still charged to your policy.
A discounted life insurance premium is when the company that sets up the policy sacrifices some of this commission and by doing so this reduces the monthly premium you will pay as your policy has been charged less of a set up fee. The best life insurance comparison sites on the web show this saving in the quotation results page so you can clearly see how much you are actually saving.
Jason Haines is a protection and mortgage advisor at godirect.co.uk, one of the UK’s most trusted information site about personal finance. You can use their free mortgage payment calculator and get instant online life insurance quotes and income protection quotes.