Now is not the time !

Now is not the time to ignore your life assurance and protection arrangements. In fact during these difficult times it is probably more important than ever that you can relax in the knowledge that your business and/or personal life can continue should the worst happen to you, your partner or your business partners whether by way of early death, illness or accident.

The credit crunch has had a huge impact on the lending market. Homeowners are trying to borrow more money against their homes, business against their business’s and lenders are increasing the cost of borrowing, as a result of falling property prices, finances are becoming a strain for many. For some, life insruance is offering a short term solution to their financial woes. Homeowners with young families are cancelling Life Insurance policies and hoping the worst doesn’t happen, businesses are also running unwarranted risks. This could not be a worse idea. Often a new policy will cost more because the older you are the more expensive life insurance becomes, you may also lose out on some benefits and features included in your current policy.

It is far better to use alternative means to reduce outgoing and think about sacrificing things that might be putting more of a strain on your finances thank you might think. For instance, smokers who quit buying a 20-pack of cigarettes a day this time a year ago would now be £3,108 better off. Due to the increased health risks from smoking, most life assurance companies charge smokers over 50% more than they charge non-smokers. Smokers who’ve quit should ask their life assurance company to re-evaluate their original policy and charge them the cheaper ‘non-smoker’ rate once they pass the qualifying period.

Cashing in life insurance is not advisable in such situations of stress like the credit crunch. Life insurance is vital. The first step to getting life insurance is to find out what you might already be covered for. If you have an endowment mortgage, for example, this will include an element of life insurance to cover repayment of the loan on your death. It will only cover the amount originally borrowed, so if you've extended the mortgage over the years then this extra borrowing won't be paid off by the policy. So work out how much money will be needed to pay off all debts, including the mortgage, credit cards, business loans and personal loans.

Also the life insurance market is one that you can rely on during the credit crunch. Fierce competition in the life insurance market has kept premuims at reasonable levels at a time when all other household bills seem to be going up. For example, a 32-year-old male non-smoker could buy £100,000 of cover over 25 years for less than £8 per month. Even £500,000 of cover over the same period would cost less than £30 per month at current prices.

Unfortunately, in an effort to save cash, homeowners and business owners are ditching life cover. Just 20% of new borrowers are opting for life cover to protect their loans. This is not advisable and just because everyone is trying desperately to save money, this is no reason. They are underestimating the importance of life insurance and see is as non-essential.

While it might be hard to make ends meet in the current financial climate, it will be a great deal harder for one person to manage the mortgage repayments on their own should their partner die in the future.

The same argument applies for business partners. With so much pressure on keeping the business ticking over imagine the additional burden were a senior or key member of staff to suffer a critical illness or die prematurely. Apart from the tragic consequences for the immediate family, what would happen to your business? Profits, clients, business loans, responsibilities to staff, plans for the future – would all be affected in one manner or another. Business protection gives you peace of mind knowing that if anything happens to your people, plans are in place to protect.