Life insurance myths lead to 40 per-cent of homeowners not getting cover, according to the latest research.

Homeowners with dependents were found not to have taken out any life insurance cover due to widespread myths, the study reveals. 

Life insurance policies provide financial protection to families ensuring outgoings like mortgages, household bills or even school fees can be covered in the event of the policyholders’ death.

Policyholders can arrange for a lump sum to be paid to their dependents or they can arrange for a regular income to be paid to them.

Despite this, only three fifths of Brits (59 per-cent) with dependents have opted to pay for life cover. MoneySuperMarket’s research finds that three reasons, two of which are popular myths,  are holding back 40 per-cent from taking out a policy. They are:

  1. It’s too expensive (46 per-cent)
  2. Insurers never pay out so there’s no point (14 per-cent)
  3. I don’t want to think about it – it’s too depressing (13 per-cent)

It’s too expensive

According to the price comparison website’s data, the average monthly cost of life insurance per £100,000 of cover is £10.96 – a quarter of what homeowners spend on average for their monthly home entertainment (£45) which includes their TV package and subscriptions like Netflix, Spotify, Amazon Prime and Disney Plus. 

For those aged between 18-29 and 30-39 the costs can be as little as £5.80 and £7.92 per month respectively. Average monthly costs increase to £20 per month for those aged 50 and over. 

Age

Average monthly cost2

18-29

£5.80

30-39

£7.92

40-49

£13.12

50-59

£24.81

60+

£43.46

Insurers never pay out

The most recent research by MoneySuperMarket found that in 2019 the percentage of life claims paid was 96 per-cent to the value of £71.5 million.

With this in mind, MoneySuperMarket is encouraging homeowners without life insurance to reconsider their decision and encouraging first time buyers entering the housing market as a result of the government’s decision to extend the stamp duty holiday to ensure life insurance is added to their list of ‘must have’ financial priorities. 

Neal Cross, life insurance expert at MoneySuperMarket, said: “For so many of us, life insurance can seem like the last thing we need but the reality is that it’s an essential piece of protection, particularly if you’re a homeowner or have dependents.

"It can give you peace of mind that, whatever happens, major costs like your mortgage can be covered so that your dependents are left with one less thing to worry about.

“For many of us, life insurance isn’t expensive and will likely cost a fraction of what a typical household spends on their home entertainment subscriptions.

"It’s also the case that if you take out a policy when you’re younger, you’ll probably benefit from cheaper premiums as insurers view you as being less likely to develop any serious illnesses."

He also explained that doing your best to keep fit and healthy is also a good way of keeping your premiums down.

Mr Cross said: “Whether you’re a homeowner or first-time buyer that’s looking to take advantage of the government’s stamp duty extension, life insurance provides financial protection once you’ve completed your purchase.”

To learn more about life insurance, MoneySuperMarket has dispelled twelve of the most popular myths on their website.