UK residents are raiding their piggy banks to maintain their standards of living, dropping family savings to their lowest levels in four years. The economy may seem to be improving but consumers are paying the price, supporting it with their savings rather than with newly-generated income.
Though the indication of economic growth is positive news, the running down of savings is not. Many UK adults will find themselves without enough money to provide for future generations in the event of their deaths.
Significant Decline In Peoples Savings
The Trades Union Congress (TUC), the national trade union centre, recently reported that household savings dropped from £20.1 to £11.4 billion. The same period was characterised by a 4.2 percent increase in consumer spending and government support of the housing market.
This is not a sustainable framework for economic recovery and is uncomfortably similar to the trends that caused the economy to crash several years ago.
According to Frances O’Grady, general secretary of TUC, sustainable recovery is based on investment, growth, and recovery of living standards. He called for a “pay rise” for Britain. A spokesperson for the Treasury commented that though the UK is recovering, it has far to go and the situation is still difficult for many families.
The spokesperson stated that the government is committed to delivering sustainable growth and jobs while correcting what caused the economy to go awry.
Providing for the Future
With more UK families breaking into their piggy banks and depleting savings, the future looks grim for their beneficiaries. Future generations may be unable to rely upon this money to maintain their standards of living once these savers are deceased. In extreme situations, beneficiaries may be forced to sell cars, homes, and other valuable assets to make ends meet or repay debts left by the deceased.
Life insurance is one way to prevent this unnecessary burden on younger generations. UK adults can allocate some of their income to life insurance premiums, purchasing policies that provide lump sum pay-outs upon their death. If there is no income to spare, using some savings to buy life cover is a smart investment in the future. Beneficiaries will receive money when they most need it and can use this for any purpose.
Tax Break Benefits
Pay-outs from life policies are not subject to income or capital gains tax, increasing the amount that beneficiaries receive. If a policy is written in trust, it is not considered part of an estate and is then exempt from inheritance tax. Consumers should consult with a life insurance expert to structure their life policies appropriately for limited tax implications.
When shopping for life cover, comparing the benefits, terms, and conditions of several policies is recommended. By taking this approach, consumers will find the most desirable cover at the most affordable price. A life insurance comparison website offers one-stop shopping for cover across multiple carriers.
Wherever they end up purchasing cover, consumers should ensure that the pay-out meets the financial needs of beneficiaries. An investment in life insurance is only worthwhile if it allows recipients to life comfortably without dipping into their own savings to carry on.