Life Insurance: Why Theres No Need to be a Desperate Housewife

Life insurance looks set to make a comeback in the UK, after a period of neglect by consumers who were simply occupied with affording a home. The stabilising of the UK house market has made many consumers take a broader view to their personal finances.

LifeSearch (a life insurance broker), in the September issue of Money Observer, highlighted a few common mistakes people make when buying life insurance:

* Believing life insurance is relevant to everyone

Life insurance is only relevant to people who have financial dependents. If you have no financial dependents, it might be more appropriate to consider income protection or critical illness insurance.

* Paying too much for life insurance

According to Money Observer, research for Sainsbury's Bank Life Insurance revealed that many people take life insurance policies from their mortgage providers and as a result could be paying too much.

* Opting to buy joint life insurance policies instead of single life insurance policies

The advice to married couples is to avoid taking out joint life insurance policies which pay out when the first spouse dies over the term of the policy, but not on the second. Single policies could provide additional cover by paying just an extra £3-4 a month.

* Missing out on a trust

The Tax Man can claim up to 40% of your life insurance payout as inheritance tax. According to Money Observer, those with assets totalling £275,000 or more (including a house) are especially prone to tax inspection. Writing your policy in trust is a way to avoid this and as a trust does not have to go through probate, beneficiaries of the policy will receive the payment without delay.

* Only insuring the main earner

Whilst it is important to cover the main breadwinner, by neglecting to additionally insure the housewife or househusband may result in extra child care costs. Family income benefit (FIB) may be an appropriate policy to put in place.

* Opting for a lump sum over income

If your dependents are likely to require an income, then buying a policy that pays out a lump sum is a mistake. Many people invest lump sums for an income, but when they invest it, they have to pay tax. Family income benefit provides a larger payout ? tax free, though the majority of banks and building societies do not offer FIB, so ask an Independent Financial Advisor for recommendations.

* Not proving full medical records or detailing comprehensive medical history

Failure to disclose a complete picture of your health, no matter how trivial, could invalidate a claim later on.

There's no excuse for not conducting your own homework, as there is an abundance of information available online. Sites such as moneynet, provide not only price comparison research on difference life insurance products, they also offer downloadable consumer product guides. Lowermybills.com proffers a similar service stateside.

Resources:

Life insurance products and research

LowerMyBills

About Rachel:

Rachel writes for the personal finance blog Cashzilla.

Cashzilla - personalfinanosaurus

---

Choosing Long-Term Care Insurance

A little over sixty percent of the folks who reach... Read More

Affordable Life Insurance!

So, you've decided to purchase life insurance. Well then, you... Read More

Discount Auto Insurance - Keep Your Hard-Earned Money

Finding discount auto insurance is so easy when you do... Read More

Car Insurance Rates ? Can You Lower Them?

Car insurance rates are prohibitive nowadays. Many families really struggle... Read More

Discount Car Insurance Brokers - Get Amazing Comparisons

To get the cheapest possible quote for your car insurance,... Read More

The Many Benefits of Travel Protection Plans

Many people purchase insurance thinking I want full coverage and... Read More

Why Dont Women Have Life Insurance?

Traditionally, life insurance companies solicited men as the main breadwinners... Read More

Life Settlement Overview

A "Life Settlement" is a lump sum settlement paid to... Read More

Insure Your House

When we talk about insurance the thing you have to... Read More

10 Tips to Save on Healthcare Insurance

Americans shopping for their own healthcare insurance can substantially cut... Read More

Cut Business Insurance in 8 ways

1. Comply with recommendations from company engineers and loss control.... Read More

Health Savings Accounts (HSA): How Do I Tell a Good One from a Bad One?

The Health Savings Account (HSA) is becoming well-known as an... Read More

Auto Insurance Primer

What is auto insurance? Auto insurance (or car insurance, motor... Read More

Why Dont Insurance Companies Reward Us for Being Healthy?

Insurance is always a gamble, a bet actually.You are betting... Read More

Health Care and Health Insurance Costs Can Be Controlled Through Lifestyle Choices

As you probably know all to well, the cost of... Read More

Finding Life Insurance Quotes For Adult Children

Shopping for life insurance quotes for adult children isn't any... Read More

Student Possessions Insurance - Insuring the Contents of Your Room

In the UK each September, 350,000 new students embark off... Read More

Health Insurance Providers Online - Benefits to Applying Online

Health insurance providers are going online to find new customers.... Read More

A Guide to Insuring Your Sailing Dinghy

If you've just bought a dinghy or are thinking about... Read More

Should You Have Higher Deductibles On Your Coverage?

What is a deductible? A deductible is the amount you... Read More

The Surety Bond Domino Effect

I have written many articles about the hard surety bond... Read More

Choosing Affordable Health Insurance For Children

In most cases, private health insurance comes through a person's... Read More

Medical Insurance Overseas

Thousands of people have work related commitments and in order... Read More

Health Insurance Online - Save Today

It is now possible to thoroughly research and buy health... Read More

What Is Health Insurance?

What is health insurance and why do I need it?... Read More

Everything You Need to Know About Life Insurance

Life insurance is a type of protection that can be... Read More

Six Ways to Cut the Cost of Your Auto Insurance

Is your auto insurance bill $12000 a year or even... Read More

Will Online Automobile Insurance Quotes Really Save Me Money?

If you're looking to save money on your auto insurance... Read More

Saving on Auto Insurance: The Road to Reduction

The road to saving on auto insurance is something that... Read More

Long Term Care Insurance

Long Term Care Insurance is needed in the event that... Read More

House Insurance - Forcible and Violent Entry

Forcible and violent entry (f&ve) is the terminology used within... Read More

Car Insurance Gearing up to Drive Down Costs

For once finances seem to be going in favour of... Read More

Everybody Wants The Best Term Life Insurance Quote

The information you need about the best term life insurance... Read More