Buying a house is a massive gamble.  Without any insurances such as life insurance or mortgage protection you have to hope that over the next 25 years you will not die, you will not suffer a long term illness, you will not be made redundant and you will not be diagnosed with a critical illness.  25 years is a long time and at least one of these events could easily happen so insurances should be part of the mortgage budget, not an additional extra.  Without the insurance option you risk losing your home.  Who wants that?

The British attitude to insurance is wrong.  Ok, which ever way you look at it insurance is a lose lose situation.  If you do have to claim on your policy it’s because someone has suffered.  If you never claim on your policy you’ve paid all of those premiums but never seen any benefit.  Life insurances and mortgage protection should be seen as a back up plan, something to be proud of, something to show just how organized you are in your home ownership plan.

The American attitude to life insurances is very different.  Americans seem to take pride in their life insurance plans.  Life insurance is something they worry about.  They want to make sure that the back up plan is there should it ben needed.  Most of all Americans seem to be proud of their planning and talk about ensuring that their life insurance is up to date.

Could I be wrong on this?   Please leave comments.

There is a big difference between premiums for life insurance and critical illness insurance and this is the main hurdle for people to understand.  Life insurance premiums keep on getting cheaper due advances in medical science.  We are living longer and the illnesses that used to be killers are now treatable in most cases so premature death is becoming less likely each year.  Critical illness, on the other hand, covers those illnesses that used to be killers so the premiums are going up all of the time.  Cancer Research say that we all have a 1 in 3 chance of being diagnosed with cancer at some stage in our lifetimes.  It’s perfectly natural for an insurance company to want to increase premiums with statistics like these because it means that they have a 1 in 3 chance of having to make a payout.

So critical illness costs a lot more than life insurance so why then should we have it along side our mortgages?  It goes back to statistics.  The illnesses covered by critical illness policies can be life threatening but but every year that probability goes down due to advances in medical science.  The death rate for cancer, for instance, has dropped by 20% over the last 15 years.  Death rates may be dropping but we are still being diagnosed and in some cases illnesses are more likely due to our current lifestyles.

Critical illness insurance takes care of you while you are still alive.  Being diagnosed with a critical illness usually means that you cannot work during treatment and chances are that you may not be able to return to work in the same capacity after treatment.  During this time you still have to pay your mortgage.  A mortgage is the biggest longest financial commitment people usually make so why risk losing your home because you have been diagnosed with a critical illness?

Statistically critical illness insurance makes far more sense for anyone with a mortgage than life insurance.  People just need to understand why and that it is worth paying for that peace of mind where their home is at stake.

1. ‘If I die then my girlfriend will just have to move out and find her own place.’  This romantic said this whilst his girlfriend was sat next to him.  They had been together for 16 years and she had followed him and his job around the globe.
2. ‘Critical illness is just a massive con – they never payout, everyone knows that! ‘- Despite the fact that I had shown claims settlement history for 4 of the largest life assurers.
3. ‘If I get a critical illness and can’t work I’ll just have to start selling myself on the streets.’  Not sure this guy had really weighed up his options.
4. ‘I just can’t justify spending money on critical illness.  I can see why it is worth insuring a Mercedes but not myself.’
5. ‘If I get cancer I’ll just work through it.’
6. ‘I’m not bothered about life insurance as I’m not likely to die but I am interested in buildings and contents insurance.’  – Did this maths teacher know something I didn’t?
7. ‘I’m not bothered about life and critical illness insurance right now.  My main priority is pet insurance for the new puppy.’
8. ‘If I get a critical illness we’ll just sell the house and move in with my mum.’  – I wonder if this guy had discussed his plans with his parents, or his wife for that matter?
9. ‘I’m fit and healthy so I’m not going to get a critical illness am I?’
10. Why would I want to waste money on life assurance?  I’d much rather spend the money on the lottery.’

Buildings insurance is mandatory but people really don’t mind paying for it.  Most people add contents insurance too even though it isn’t a legal requirement.  Car insurance is a legal requirement but fully comprehensive insurance isn’t, yet most people happily pay extra for fully comp.

So, do you need life insurance?

If you are single with no dependents then no, you probably don’t need life insurance.  Critical illness insurance or income protection is a far better idea.  As you’re own your own you need to make sure that you can pay your mortgage and bills no matter what kind of accident or illness might happen.

If you are in a relationship or have a family then life insurance is a good idea but not mandatory.  You have to ask yourself, if I died could my partner afford to pay the mortgage on his/her salary?  Don’t just assume that the surviving partner will sell the property and move on.  Right now it’s difficult to sell a property and it can take a long time to find a buyer and besides, if you’d just lost a partner would you really want the stress of having to move as well? Where would the surviving partner move to and would they be able to afford a new mortgage?

If you have children ask yourself what the financial impact of your death would be?  Would your partner be able to pay the monthly bills, the mortgage and look after the children?

If you find that the answer to these questions is that yes, you need life insurance, don’t delay it any more than you have done already.  Get a quote.  Life insurance is the cheapest kind of term insurance available so it will probably cost you only pennies per day.

For a limited time only we are currently rebating 50% of our commission back into your policy which makes your premiums cheaper.

For a start the insurances are very different.  Life insurance only pays out when you die (unless you have built critical illness into the policy) whereas pet insurance takes care of all of the unexpected vet bills.  To a certain extent I can understand why someone might think of pet insurance first as it doesn’t cost much and the benefits are clear.  What I can’t understand is when couples and families think that pet insurance is worth spending money on but life insurance isn’t. 

I don’t have pets but if I did I would probably want some help with paying vets bills.  I do have a wife and children and I definitely wouldn’t want them to suffer if I died yet there are a lot of men and women in the same position who don’t want to spend money on life insurance.  Why?  It doesn’t cost much.  The family needs to be looked after whether you are alive or dead.

The obvious answer to all of this is pet insurance AND life insurance.  If one makes sense then surely the other should too?  If someone is that convinced with the benefits of pet insurance then logic states that they would be falling over themselves to have some critical illness cover but somehow logic never comes first place.