Life cover – Is it a cost worth paying?

Many people have to budget carefully in order to make ends meet. Finding the money to pay for essentials, such as food, utility bills and council tax, can be hard enough. There may be little left over, after meeting these costs, to fund “luxuries” such as satellite TV, holidays, meals out and gym membership. People may also want to put aside some money into savings for themselves and possibly their children. So, where does life cover fit into such a money balancing act? Is it a cost that is worth paying?

Spending on non-essential, luxury, items can produce a feelgood factor. The goods or services that are purchased can bring great joy and satisfaction, be it the latest smartphone, great food at a swanky restaurant or a 2 weeks stay in an all inclusive hotel in the Caribbean. This enjoyment will often be temporary; a phone may soon become outdated, a meal or holiday can soon become a distant memory. That said, at least the money will have been spent on something tangible, a possession or an experience, and that can represent some value for the outlay.

On the other hand, what value is there in life cover?  Anyone taking out a life cover policy must commit to paying a regular monthly premium. They will have a policy document to keep safely, with their other important paperwork, and the promise that certain amounts with be paid on their death or if they are diagnosed with a terminal illness. Most people will hope that it never has to pay out the cash lump sum. So where is the value?

And anyway, isn’t life cover expensive? The answer is that it’s often very affordable, especially when compared with the cost of many of the everyday non-essentials that many people buy, such as the following:

ItemCost
Sky TV Package – Sky+ with Sky Sports£31.75 a month1
Family cinema ticket – IMAX Millennium Point Birmingham, 2D feature film£34.003
Pizza Hut family and friends deal (As at July 2011)£19.954

So let’s compare these prices with the cost of life cover5.

Person(s) covered for £100,000 level cover over 20 yearsCost6
35 year old, male, non-smoker£9.10 a month
35 year old, female, non-smoker£7.47 a month
Married couple both aged 35 and non-smokers£13.11 a month
Person(s) covered for £100,000 level cover over 20 yearsCost6
35 year old, male, non-smoker£9.10 a month
35 year old, female, non-smoker£7.47 a month
Married couple both aged 35 and non-smokers£13.11 a month

These figures help to dispel the myth that life cover is expensive and show that the cost of life cover compares favourably with the cost of some of life’s little luxuries.

So, life cover is affordable but what do you get for your money? Life cover provides financial peace of mind and the knowledge that should the worst happen, a lump sum amount will become available for loved ones. This will often be the lifeline that enables debts to be repaid and ongoing expenses to be met.

For many people, life cover is most definitely something that is worth paying for. The cost of not having any cover could be enormous for those who are left behind. They may be drawn into a financial black hole, not only unable to treat themselves to non-essentials but perhaps unable to pay for essential items such as the mortgage, utility bills, transport costs and food.

[1] – Sky.com – Price at 14 June 2011

[2] – Moneysavingsexpert – 26 May 2011

3] – IMAX Cinema Millennium Point Birmingham Prices – 14 June 2011

[4] – Pizza Hut Deals

[5] – All figures for a policy from John Lewis Insurance and correct as at 15 June 2011.

[6] – The cost of life cover will vary according to:

• the amount of cover required;

• how long the cover is to last;

• whether the cover amount stays the same (level cover) or reduces (decreasing cover) throughout the term of the policy;

•the age and gender of the person(s) covered and their health, occupation and pastimes.

Company Profile:

John Lewis Insurance offers a range of insurance services selected by the John Lewis Partnership. These include car, home, pet, travel, wedding, event and life insurance products.

For more information about Life Insurance from John Lewis Insurance please visit the website here – http://www.johnlewis-insurance.com.

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