Life insurance is something you should very much be considering from the start of your adult life, especially if you have children, or a mortgage, or you earn more than your partner.
Income protection – which pays a replacement income should you be unable to work due to accident or sickness – is something you need to consider taking out as soon as you are in employment. What would the consequences be were you to cease receiving a wage and be forced to reply on the very limited state support?
Critical illness insurance might also be appropriate for adults of any age – after all you can be diagnosed with a serious illness at any age, no matter how young and healthy you might feel. This type of insurance is often taken out to protect a mortgage, and ensure the balance is paid off were you to be diagnosed with a critical illness. It is important to note, however, that critical illness can be a useful way of ensuring that you (and any children) can receive a lump sum to pay for medical treatment or nursing costs, or for the necessary modifications to your home to adapt to your condition.
Examples of insurance Moneysworth has arranged for under 30s in 2024 include:
- £100,000 of combined life and critical illness cover over a term of 30 years, for a 28-year-old-woman to cover her mortgage. The premium was £31.05, and this was more than the standard cost of this insurance, owing to the client’s mental health issues
- £1,300 per month of income protection benefit or a 27-year-old man, with the benefit amount to increase each year in line with inflation. This benefit level covered around 70% of his take home pay. The benefit would be paid for a maximum of two years’ absence from work. Although the plan runs to age 68, the premium was just £15.47 per month.
- £171,000 of life cover over 32 years, at a cost of £16.60 per month, for a 26-year-old woman. The amount paid out will decrease over time in line with the expected reduction in the balance of her capital repayment mortgage. Here, the insurer increased the premium by £7 per month owing to the client’s mental health disclosures.
- £285,000 of decreasing cover to protect his mortgage, plus an additional £50,000 of level cover for his family. These were arranged over 35-year terms for a 26-year-old man, at a combined cost of just £23.12 per month.
- £260,000 of life cover for a 29-year-old man, which provides enough to clear his mortgage in the event of death, plus an additional amount for his family. The policy also provides a level lump sum of £25,000 should his child be diagnosed with one of the critical illnesses covered by the policy, all for just £11.62 per month.
- £211,500 of decreasing cover for a 29-year-old woman, to cover her mortgage. The premium is £14.03 per month, and had been increased by around £4 per month because of her history of depression.
- £270,000 of decreasing cover for a 29-year-old woman, to cover her mortgage for the whole its 35-year term. The premium is £20.72 per month, and had been increased by around £10 per month because of her complex medical history
- £195,000 of level cover for a 27-year-old woman, to cover her mortgage for the whole of its 30-year term. The premium is £18.68 per month, and had been increased by around £12 per month because of her epilepsy
- £260,000 of life cover for a 28-year-old woman, which provides enough to clear her mortgage in the event of death, plus an additional amount for her family. The policy also provides a level lump sum of £25,000 should her child be diagnosed with one of the critical illnesses covered by the policy, all for just £24.89 per month. This cost figure includes an increase of around £10 from the standard rate due to her multiple sclerosis and mental health issues
Perhaps the best reason for taking out life insurance, critical illness insurance or income protection insurance at an early stage in your adult life is that your premiums will be much cheaper than would be the case at an older age.
If you would like to find out more, then contact Moneysworth today to see how we can help.
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