Life insurance wise investment in personal finance or excessive caution

Life insurance wise investment in personal finance or excessive caution

Life insurance is typically taken out to offer valuable financial protection for your family if you die, which makes a payment to your financial beneficiaries, heirs or family members. The scope of this payment depends on the insured sum and earnings. Life insurance and life insurance may be linked in advertising, but keep in mind the two policies are different. Life insurance is a form of financial protection, which is also an investment, you should always have a payment at the end of the term of the policy. Life insurance, on the contrary is simply financial protection for your family, avoiding the issuance of debt in the event of your death.

According to the article in the Fair Investment Company, the British life insurance sector fell by almost half the size of the pensions industry last year, according to the Association of British Insurers, less than 50% of UK households to maintain life insurance.

In their latest newsletter on the subject, found the Association of British Insurers reported that 25% of mortgage holders had insufficient life insurance to cover their debts. The relationship between the new life insurance policies to new mortgage loans was apparently 68% in 1994 but in 2004 this was reduced by half to 33%.

The absence of mortgage life insurance is a serious risk to the family of owners. If banks engage in large-scale seizures because of the lack of life insurance, which would entail a risk on their loan portfolios and reputation. Association of British Insurers also one of the main reasons for the gap has increased between mortgage and insurance is the emergence of people remortgaging their property to take advantage of home equity by increasing the value, without ensuring their loans.In their report indicates that approximately 63% of all new mortgages, loans or advances further against 34% in 1994. Egg reported at around the same time as three out of four of these new loan homeowners had no intention to provide this additional debt. This is particularly worrying if couples are remortgaging their property later in life - retirement, there should something happen to the breadwinner, the partner will be left with significant debts without the ability to repay the loan.

Reasons for the downward trend in life insurance take-up include:

* Relaxation in lending policy – increased competition in the mortgage market means that lenders are not forcing life insurance policies on their customers.*

* High house prices have stretched homebuyers, in particular first time home-buyers, in terms of their mortgage repayments, that the additional costs of a life insurance policy are deemed too expensive;.*

* There are more households with no dependents.*