Advisors reveal bizarre reasons clients don’t take out life insurance
Brits are often happy to talk of rising house and energy prices and cutting costs where they can, but when it comes to life insurance, some reasons for skipping it are enough to make a cynic chuckle. Take it from these financial and legal experts.
Scott Taylor-Barr, Principal Advisor at Barnsdale Financial Management, has seen his fair share of doozies.
“Over the years I have had some very interesting reasons for turning down life insurance”, says Taylor-Barr, in an interview with the NewsPage Agency.
“The two that stick in my mind are the chap who said he wouldn’t do any protection because ‘my missus wants Sky TV and that’s more important to her’, and my absolute favourite was the lady who said, ‘I don’t need protection because my medium has seen me alive and well celebrating my 80th birthday.'”
The advisor says it is unfortunate that many have a poor relationship with insurance: “They tend to try and twist themselves into knots trying to find reasons why they don’t need it and then when they realise they do, they go looking for the very cheapest they can find, rather than look at quality of cover. Sadly, I am finding that the most common objection nowadays isn’t really an objection at all, it’s ghosting; the person simply stops replying to messages, emails or calls.”
Immortals among us
Joshua Gerstler, Chartered Financial Planner and owner at The Orchard Practice, has a long list of rationalisations from clients on how they will fund their family’s lifestyle should they get a critical illness or die. Some even have immortal qualities and psychic abilities: “I have always been fit and healthy. I’ll put the money in a bank account instead,” or “I am not planning on being ill.”
Others have it all sorted, but their in-laws may be unaware of their backup plan: “My wife can sell the house and she and the kids can move in with her parents.”
And then there’s the brutally honest: “Why should he get anything after I’m gone?”
Michelle Lawson, Director at Lawson Financial says many people feel they are “immortal and won’t ever need insurance,” and that it’s an “unnecessary outlay.”
She says many people assume their parents will pick up on the protection gap rather than take on personal responsibility.
She suggests, “Protection really should be at the forefront of people’s minds. Professional advice should be sought rather than visiting the comparison sites as there are many things to consider and take into account that these sites do not.”
58% of people do not have life insurance, rising to 69% for those aged over 55. Those aged under 35 are most likely to have life insurance (52%). Of those without life insurance, 33% say it’s because the cost is too high.
Forbes Advisor
David Robinson, Co-Founder at Wildcat Law suggests business owners can also be misguided on their coverage.
“I’m self-insured” is a common reason given by wealthier people who own their own businesses,” says Robinson. “They often miss the point that if they can’t work or were to die their business would also cease to function. It’s frankly bizarre.”
What is Robinson’s favourite reason someone gave for not taking out life and critical illness cover? “They needed to insure their cat.”
Life events that make you rethink life insurance
Humour aside, taking out life insurance is no laughing matter. Certain life events may trigger the desire to get cover especially if you are solo self-employed. A recent Forbes Advisor survey revealed some key triggers:
Becoming a parent: This topped the list, with 30% of policyholders saying it spurred them to get coverage. It’s understandable – you want to ensure your family is financially secure if you’re no longer there.
Buying a house: Mortgages often come with life insurance requirements (21% of respondents). But beyond that, 15% specifically aimed to use life insurance to pay off their mortgage in case of death, especially if they’re the sole financial provider.
General caution: Interestingly, over a third (38%) said they bought life insurance out of a sense of overall preparedness, not necessarily fearing something bad would happen.
As your life changes – more kids, a bigger mortgage – you might need to adjust your coverage level. While the premium might increase with more coverage, the peace of mind and potential future benefits are invaluable.
