Life insurance: The one financial decision you shouldn’t put off

2. I’d rather spend money on something else

Good things come to those who wait – but it’s not a mantra we as humans tend to live by.

Our propensity towards instant gratification and enjoying rewards in the here and now can hold us back from taking out insurance as we are less likely to wait to reap the benefits in the long term; even if the pay-off is better.

Ever snoozed your alarm, knowing that the extra 10 minutes in bed is going to make you late for work? You get the picture.

Known among experts as ‘present bias’, this especially applies to life insurance, which – in its traditional sense – is something you’d rather not ever have to use.

It’s a big reason why nearly one third of couples prioritise Netflix subscriptions and gym memberships over life insurance.

These days, however, financial protection offers far more than ‘peace of mind’ – through the Vitality Programme, our members can get rewards for being active. This immediate value means ‘present bias’ is no longer a problem.

During 2023, Vitality members received a total of £82m worth of value through Vitality partners, such as Caffè Nero food and handcrafted drinks, Waitrose & Partners food with the Good Health logo, Vue and ODEON cinema tickets, as well as access to health screens and discounts on wearable technology, plus much more.

3. My parents or family will look after me

The ‘Bank of Mum and Dad’ is a well-known expression that refers to parents assisting their children onto the housing ladder.

It’s also on the rise, research shows that 37% of first-time buyers in the UK getting help with their deposits last year, compared with 27% the previous year.

Given its prevalence, it’s often assumed that the same support would be available to replace income lost due to illness or injury.

However, it’s unlikely to last forever and could make a substantial dent in that much-needed housing deposit – or other forms of future savings and investments – later down the line.

Especially considering that an average Income Protection claim is worth more than £17,000; having the right financial protection in place would help avoid this.

Want to know more about different life insurance products? Visit our guide here: Different types of life insurance in the UK explained.

4. I’ve got sick pay at work

The expectation that your employer will look after you if you are unable to work is not unreasonable.

Though there is a risk that you might get far less financial support than you actually need.

Sick pay can vary from business to business and, according to a recent survey, almost half of UK businesses do not provide anything beyond the minimum state benefit of Statutory Sick Pay (SSP).

At £116.75 per week and only paid for up to 28 weeks, SSP is unlikely to be sufficient for many people.

Even when a company offers ‘enhanced’ sick pay over and above SSP, there’s often no knowing when that might run out, which is where Income Protection can help. This type of cover gives you a tax-free monthly income if you are unable to work due to illness or injury.

5. Insurers don’t pay out

‘Even if you do need it, there’s no point in taking it out because insurers don’t pay out anyway… right?’

Looking at Vitality’s results for Serious Illness Cover, Income Protection and Life Cover last year alone, just under 95% of all claims were paid overall – totalling £117 million.

Around £446m worth of claims have been paid for life insurance related plans over the past five years, debunking the myth that life insurers don’t pay out.

Quite the opposite, in fact.