Some UK residents consider life insurance a bother and others cannot qualify for a term or whole life policy. In these cases, it is smart to consider alternatives life insurance because death does not announce itself, leaving many surviving family members unprepared to deal with the financial consequences. The most common alternatives to life insurance involve investing money or saving it to create a financial cushion for loved ones who are left behind.
Investing or Accumulating Savings
To accumulate enough money for surviving family members to live comfortably, most people must save a substantial amount every year or make investments that earn extremely high returns. If saving is a priority from a young age or the individual is a very smart investor, it may be possible to amass enough money.
Other people may find themselves sacrificing their own lifestyles to save money for generations that may outlive them. One advantage to saving rather than purchasing life insurance is the ongoing availability of the money.
Since no one knows when death will come, it can be difficult to know how much money to save. There may not be enough time to accumulate an amount that will provide long-term benefits to surviving loved ones. In many cases, an individual must save enough to cover a lump sum repayment or a lifetime of monthly mortgage payments.
Survivors may also require money to cover living expenses until minor children reach adulthood or until these caregivers can obtain employment that offers a decent income.
Mortgage Insurance as a Life Insurance Alternative
Individuals who own homes should review the different mortgage insurance plans available. This insurance helps to keep the mortgage from defaulting due to unemployment, accident, illness, or the death of the insured. Since it combines mortgage life insurance with critical illness cover and mortgage payment protection insurance, it technically does have a life insurance component.
Level term policies are suitable for interest-only mortgages and decreasing term policies are designed for principal repayment mortgage loans. A mortgage life insurance policy with indexation tracking the Retail Price Index is also available. The sum assured by this policy increases annually with inflation.
An experienced life insurance professional will provide more information and guidance regarding the most appropriate and affordable policy.
Options for People Without Dependents
An individual who does not have any dependents is usually more concerned with taking care of his or her financial needs in the event of an unforeseen circumstance. Income protection insurance or a stand-alone critical illness policy may be the solution. Income protection provides financial benefits when redundancy prevents the policyholder from working and critical illness benefits apply when the insured is diagnosed with a serious illness meeting certain criteria.
Life insurance is a popular benefit in the UK but it is not ideal for everyone. Individuals who prefer to do without it should focus on investing and saving money for their loved ones to live on in the future. A homeowner may find a mortgage insurance package an attractive alternative that does not require saving a substantial amount of money.
People without dependents may wish to purchase cover that provides financial relief when an illness, accident, or loss of employment prevents them from working.
