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

---

Finding California High Risk Truck Insurance

California high risk truck insuranceIf your are in need of... Read More

Buy Life Insurance Online and Save

There are many ways to research and buy a life... Read More

Individual or Family Health Insurance Options

As more and more individuals working at home with or... Read More

Insurance: A Necessity for Peace of Mind

There are many choices for insurance. Insurance is a policy... Read More

Hidden Ways to Cut Car Insurance

Consumers are countering rising gasoline prices and other vehicle operating... Read More

Discount Life Insurance Will Give You The Best Protection You Need

There is always a chance that there is a better... Read More

What Are The Auto Liability Insurance State Minimums For My State?

As you shop online for the best auto insurance deals... Read More

Taking The Mystery Out Of Long-Term Care Insurance

Here's the good news: with improvements in medical technology and... Read More

Young Driver Car Insurance

It has become increasingly difficult to get young driver car... Read More

What Is Term Life Insurance?

There are two different types of life insurance, term life... Read More

Health Insurance for the Beginner

When it comes to your family, selecting the right health... Read More

Disability Income Insurance Can Meet All Your Financial Needs

Disability income insurance can cover you in the event of... Read More

Are Accidents More Likely To Occur Closer To Home?

If you are going to be involved in an accident,... Read More

Term Life Insurance Help

Life insurance can be a very scary thing. If you... Read More

Shopping Options for Auto Insurance

Shopping for car insurance can be a big undertaking. It... Read More

How To Best Handle Health Insurance Plan Changes

Many economists have suggested and recent economic data indicates that... Read More

An Intro To Life Insurance

There are many options available for life insurance, and for... Read More

Health Savings Account (HSA): Helpful for Older People?

The Health Savings Account (HSA) is an amazing tool that... Read More

Travel Health Insurance - Understand the Benefits

If you're planning an overseas trip, you need travel health... Read More

All Auto Insurance is Not Created Equal!

Contrary to what you may have heard all auto insurance... Read More

Origin Of Long Term Care Insurance

In the early 1980's Medicare started using a system called... Read More

Health Insurance, What Does It Mean?

Your health insurance policy is an agreement between you and... Read More

Insurance For The Self Employed And Those Seeking Health Insurance

First of all, congratulations on deciding to go out and... Read More

Converting An Unwanted Life Insurance Policy Into Ca$h

Do You Own A Life Insurance Policy That You No... Read More

Facts About Renters Insurance

If you rent an apartment or house, you might consider... Read More

Cheap Term Life Insurance is Available Everywhere

Cheap term life insurance is easier to get than most... Read More

Vehicle Insurance Online is a Convenient Way to Get Insurance Cheap

Online comparison shopping is a convenient way to get cheap... Read More

Tips for Buying a New Home

My wife and I recently purchased a new home in... Read More

Is Purchasing Travel Insurance Smart?

To answer the question "is purchasing travel insurance smart?" let's... Read More

Check Out The Variety of Auto Insurance Texas Style

They say everything is bigger and better in Texas, and... Read More

Reducing Soaring Insurance Claim Costs

With the soaring rise in claims to insurers from their... Read More

Useful Tips on Reducing Insurance Costs

Most people want lower insurance costs but are often too... Read More

Consequences of Late Insurance Payments

Did you realize that it could cost you more than... Read More