How many people in the UK have life insurance

September 5th, 2022
How many people in the UK have life insurance

One in three people in the UK (33%) currently have life insurance cover in place. This means that 20 million people have arranged life insurance policies which will help to financially support their loved ones should the unthinkable happen to them. Shockingly though, this means that two-thirds of people in the UK do not have life insurance policies in place. Recent figures showed that around one in four breadwinners, or 8.5 million people with dependents, do not have any type of life cover.

The Association of British Insurers estimates there is a £263 billion gap for families who do not have a life insurance policy in place. There is also a gender divide, with 45% of men having life insurance in place compared to just 38% of women [1]. Life insurance UK figures compare favourably to Germany, where 31% of the population have cover in place, but trails behind France where 42% have life cover [2].

Those who are young, single, child-free and without a mortgage may see life insurance as unnecessary. But for those who do have a mortgage or people who depend on them financially, life insurance is an essential step in making sure your family’s financial future is secure.

What is life insurance and why is it important?

Life insurance pays out money to your family if you die and are no longer around to support them financially. It acts as a financial safety net for your loved ones and the money can be used in many different ways. It could cover the lost earnings of the deceased, be used to pay for household bills, pay off a mortgage, pay for a funeral, cover education fees or simply provide a financial legacy for your family.

Nobody likes to think about what will happen when they die, but failing to do so could leave your family facing crippling bills or the possibility of losing their home at an already challenging time. Ultimately, life insurance can give you and your family peace of mind that they will be looked after should the worst happen. In a marriage or relationship, it also prevents one party from being left to deal with all the expenses which can include household and utility bills, childcare, mortgage repayments, education fees, car repayments and other loans.

Do I have to have life insurance?

There is no legal requirement to have life cover in place and there is no magical age at which it should be taken out. Policies can be taken out by anyone aged from 18 to 90. However, there are some key events which may prompt someone to take out a life insurance policy. These include:

– Having children. The cost of raising a child to the age of 18 currently stands at a whopping £202,660 [3]. Most parents want to put measures in place that mean their children will be financially secure even if they are no longer around to look after them.

– Buying a home. If you die before your mortgage is paid off, then responsibility for repayments falls to your partner, other family members or next of kin. Buying a home is a catalyst for many to take out life insurance to ensure plans are in place to deal with the mortgage, should you pass away.

– Getting married. Life insurance can help make sure your partner is looked after if one of you were to die.

– Planning for a funeral. Figures show the average cost of a funeral in the UK is £4,056 [4]. Many people use life insurance as a way to cover the cost of this, rather than landing their family members with a big financial burden.

– Thinking about the younger generation. Many people simply want to use a life cover pay out as a way to leave a financial legacy for their younger family members, including children and grandchildren. Such legacies are often spent on things such as home deposits or university education.

What types of life insurance are there?

There are several main varieties of life insurance and there may be times in your life when one type is more pertinent than another. There is no limit on how many life insurance policies you can have, so a person may opt to have several in place to cover different expenses.

– Whole of life insurance

Whole of life insurance is basically insurance for life and is a popular form of life assurance. Under this kind of policy, a person is covered for the whole of their life. This means that regardless of when they die, a pay-out will be made to their beneficiaries. This type of policy is usually more expensive as a pay-out is guaranteed at some point. But it can give great peace of mind that, as long as you have kept up premiums, your family will definitely receive a pay-out.

– Term life insurance

Term life insurances cover you for an agreed period of time. For example, you may choose to have term life insurance for 30 years. If you die within this period, a pay-out will be made to your family. If you do not die within this time, your policy simply ends and you don’t recoup any of your premium payments. This kind of policy is often ideal for those with certain obligations over a set period of time, such as paying off a mortgage or a debt or for raising children.

There are three main types of term life insurance: decreasing term, level term and increasing term.

Level term life cover means the amount your dependents receive will remain the same regardless as to when you die. Whether you die within the first year of your policy term or the last, the amount your family receives will remain the same. While this is great for planning your finances, your pay-out is likely to be badly affected by inflation over time.

Under decreasing life cover, the amount of money your insurance provider will pay out upon your death reduces as the term period progresses. Such policies are usually taken out to cover a mortgage and it can also be known as mortgage protection. Your pay-out will then move in line with your remaining mortgage. This can give the policy holder peace of mind that if they die before the mortgage is paid off, their loved ones will be able to clear the debt.

In contrast, increasing term life cover sees the amount your insurer pays out rise over time. This can often be a good choice for families with children whose needs may become greater as they get older (for example, school or university fees).

What other policies or add-ons should I consider?

-Over 50s insurance.

This is a type of whole of life cover specifically aimed at 50- to 85-year-olds. The main advantage of such insurance life policies is that they offer guaranteed acceptance. Your medical status or medical history are not taken into account as long as you fit within the age bracket. Pay outs are often capped and offer smaller amounts than other types of insurance policies. As such, many choose over 50s insurance as a way to cover outstanding debts or bills or to cover the cost of a funeral. However, many over 50s policies have a one or two year introductory period during which payments would not be made if you pass away. Many do allow you to stop making payments once you reach a certain age, usually 85.

-Critical illness cover

Not strictly a life insurance policy but an extremely useful add-on or stand-alone policy, critical illness cover gives you a fixed amount lump sum should you be diagnosed with a life threatening or terminal illness. It can help to cover lost earnings should you be unable to work. Claiming on the policy usually means the policy ends and no further payments will be made.

-Joint life insurance

People who are married or in a relationship may choose to take out joint life insurance which will pay out in the event of one of you passing away. A joint policy is often cheaper than two single ones. However, a joint policy will only pay a lump sum upon the first death and cover ends after this.

How much does life insurance cost?

The cost of a life insurance policy is dependent on a number of varied factors. An insurance provider will assess a number of factors before offering you a price for your premium. This includes: –

  • Age. Life insurance is cheaper when you are younger and in good health. This is why many advocate getting life insurance when you are in your 20s in order to take advantage of better premiums.
  • Lifestyle. Whether you smoke and how much you drink are some of the lifestyle factors that can impact on the cost of your life insurance.
  • Health. Providers will want to know about your current health, past health issues and family conditions to determine how much of a risk you are.
  • Type of insurance. Some life insurances are cheaper than others. Whole of life cover is more expensive as a payment is guaranteed. A decreasing term policy is usually cheaper because the pay-out amount reduces each year.

How do I know which type of life insurance policy to choose?

When it comes to life insurance, there is no ‘one size fits all’ approach. It is simply a case of looking at your own circumstances, your financial obligation and what premiums you can afford. You need to assess what lump sum you may need to leave behind for your family to cope, or whether help with the mortgage would be more beneficial.

How do I get life insurance quotes?

If you need life cover and have been searching the internet for "life ins," getting a life insurance quote could not be simpler. Free Price Compare can give you access to scores of quotes for life insurance so you can find the best policy for you at the best price. Use our online tool to tell us a bit about yourself and within seconds, Free Price Compare can quote life insurance policies from a wide array of trusted providers.

To compare life insurance cover, you need to decide what type of policy you want, how much cover you need and the cover length. You also need to decide on any additional cover, such as critical illness cover, and whether you want to consider a joint or single policy.

Then using our online search tool, select your policy type and cover length before entering your personal details and we will do the rest. Free Price Compare will give you access to dozens of quotes so you can choose the best option for you and get covered.

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