Life Insurance: Wise investment in personal finances or excessive caution?

Life Insurance: Wise investment in personal finances or excessive caution?

Life insurance is generally taken to offer valuable financial protection for your family in case of their death, on which a payment is made to your financial beneficiaries, heirs or family members. The scope of this payment will depend on its sum and insured profits. Life insurance and life assurance may be intertwined in advertisements, even if it takes into account that the two policies are different. Lifesurance is a form of financial protection that is also an investment, since it must always receive a payment at the end of the policy period. Life insurance, on the other hand, is simply financial protection for your family, avoiding the debt problem in case of their death.

According to a fair investment company, the British life insurance industry was reduced to almost half the size of the pension industry last year and, according to the British Insurers Association, less than 50% of households From the United Kingdom they have a life insurance policy.

In its most recent bulletin on this subject, the British Insurers Association discovered that 25% of mortgage holders did not have insufficient life insurance to cover their debt. The proportion of new life insurance policies to new mortgage loans was apparently 68% in 1994, but in 2004 this had decreased by half to 33%.

The absence of mortgage coverage represents a serious risk for owners. If the banks embarked on large -scale recoveries as a result of this absence of life insurance, this would impose a risk to their books and loan reputations. The British Association Association also states that one of the main reasons behind the greatest gap between mortgage loans and insurance is the appearance of people who break their property to take advantage of capital release through an increase in value, without ensure your loans. In its report, it was indicated that around 63% of the new mortgage loans were additional re -back or advances, compared to 34% in 1994. Egg reported at the same time, that three out of four of these new loan owners did not have intention to ensure this additional debt. This is particularly worrying if couples are remorrant later in life, towards retirement, since if something happens to the support, the partner would stay with significant debts without the ability to return the loan.

The reasons for the tendency to take the tendency to take life insurance include:

* Relaxation in loan policy: greater competition in the mortgage market means that lenders are not forcing the life insurance policies to their customers

* High housing prices have stretched housing buyers, in particular housing buyers for the first time, in terms of their mortgage payments, that the additional costs of a life insurance policy are considered too expensive

* There are more homes without dependents