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I like to be prepared. So my pantry is full of all kinds of canned goods, condiments, chips, and other supplies. This also explains why there are so many bubbles in the house. And in the wine fridge. That's why the chest freezer is packed with a variety of frozen foods. You never know what will happen or who will show up expecting food or water.
When the coronavirus hit and supermarkets panicked, staples like toilet paper, pasta and dog food came into their own. They weren't there for a rainy day, they were there because that rainy day came. Extrapolating that philosophy, you should get life insurance. I don't. Should I buy it?
I always thought that life insurance meant throwing away a huge amount of money. Why would you pay for insurance that you could have covered if you saved carefully? Until recently, I didn't even understand the difference between life insurance that covers you for a certain period of time and life insurance that covers you for life. . In any case, there is a tremendous range of policies in the world. And they all seem to have a longer list of exclusions than the list of what they actually cover.
However, very little is written about these policies by users. Is it because you won't know if it's worth the price until you try on the geta? And who would write a passionate article about how nice it was to receive a huge lump sum, but someone had to die in order to receive the insurance money?
A policy of just $5 a month doesn't seem to make much sense. You can receive an amount from just over £1,000 up to a maximum of £10,000 to cover your funeral costs. Sunlife estimates that a basic funeral costs nearly £4,000, with the total cost of death being £9,200.
To be honest, I don't want to pay for my funeral in monthly payments. I'm a great companion, a great party host, and remember birthdays and anniversaries very well. I was exhausted when I was gone and needed the thousands of pounds needed to pay for an expedition to dump my ashes from the beach into the North Sea. A shed is the least your friends and family can do. (I don't want you to push me up off the floor, so please do it at high tide, preferably when it's not windy).
If you have children or dependents, we understand that insurance that covers mortgage payments and school fees can be helpful at some point in your life. And if you are of working age, borrowing is high, and your household budget is based on future income, this makes sense.
However, I was never interested in these products at the time and am now in a different financial situation in my life. Life insurance that only covers you for the duration of the policy is like an old-fashioned pyramid scheme. Pay a lot of money and get the wedge when you die. Call me selfish, but if he's going to pocket or invest £100,000 in critical illness cover, I think he'd be better off paying £189 a month plus an extra £267. .
And there are limits. Many policies seem to have a cap of around £400,000, which is a useful amount to receive. Unless you have little property or have set up a trust so that your life insurance coverage is owned by your beneficiaries, it could end up strengthening your inherited estate. There is, which means it will be taxed. no thanks.
But this market is huge. According to online data, the world's annual insurance premiums exceed $1.1 trillion. Also in the UK, market research group IBISWorld estimates the UK market size at approximately £65.4 billion. That's a lot of premium.
The industry itself also has a hard time communicating how great its track record is in paying claims. According to Reassured, his average in 2022 was 96.9%. Perhaps it is our realization that we have had to make claims and arguments over the years that makes such a high payout rate surprising? 99.9% payout on life insurance claims is easy to explain is. It is quite difficult for an insurance company to dispute a death. Unless you're Lord Lucan.
These products appear to be aimed at people with no savings, no pensions, no mortgages, and no cash in the bank. Finder.com has some surprising statistics about the finances of the UK population. Almost a quarter of Brits have no savings at all, rising to 32% of Gen Xers. Half of us have less than £1,000 stashed away, and the average person in the UK has just £17,773.
We often perceive our country to be wealthy. And we are compared to other countries in the world. Still, there are millions of Britons who somehow manage to get by. Barely surviving on low-wage jobs is the reality for many. The financial crisis, rising costs of living and energy prices are exacerbating the problem. For many people, receiving insurance benefits in a timely manner is very important.
As for myself, I'm much more cautious than I sometimes portray in this column. I've made some smart investments over the years, but I'm wondering if an insurance policy or set of insurance is really what I need. Although my daily expenses have to be cut back, my overall financial value has never been higher. Like many people reading this column, I am rich in assets but poor in cash.
I'm going to spend thousands of dollars each year on these expensive insurance policies. And focus on three important things. Write that will I never bothered to draft, continue to invest carefully so I have enough money for a great send-off party, and let my family know where I keep my soda.
James Max is a television and radio host and real estate expert. The views expressed are personal. X, Instagram, Thread @thejamesmax
