It's a matter of life insurance and death- mythbusting

9 December 2011

skullThere’s nothing like Christmas for making you think about life and death, so this is probably a good time for some research into people’s misconceptions about life insurance, money and death. New research from Gocompare.com , who are probably hoping you will now rush off and buy some life insurance from them RIGHT NOW, have compiled a list of common ‘myths’ that they are busting for your benefit, in the season of goodwill.

18% of Brits believe that if they die their credit card debts die with them.
If you die owing money on your credit cards, your Estate (the sum of all your worldly goods) will have to repay your credit card debts before any assets can be passed on to anyone who you would like to inherit the family silver, for example. However, if you have no assets, your credit card provider cannot pursue anyone else for your individual credit card debts, unless it is a joint credit card account.

44% of Brits believe that life insurance does not pay out for suicide.

Cheery one this, but whether a policy pays out in the case of suicide differs between insurers. However, generally speaking suicide is covered after the policy has been in force for at least one year, but individual policies may vary so do check the small print.

44% of Brits believe that they should tell their life insurer if they start smoking or take up a dangerous sport. 23% think they should tell their life insurer if they change occupation or put on a lot of weight. 48% believe that they should tell their life insurer if they get a serious illness.

Handily, when you take out life insurance the insurance company assesses your risk based on your health, lifestyle, occupation and whether you participate in any dangerous sports or pastimes at that time. Unless you reapply (for example to try and obtain cheaper premiums (see below)) the circumstances at the time of taking out the policy are all that matter.

Provided you answered all of the questions accurately and honestly, you do not need to inform the insurer of any unforeseen changes and changes to your lifestyle will not affect your premium or your chances of your beneficiaries making a successful claim.

People think they should inform their life insurer if they give up smoking, lose lots of weight or give up a dangerous sport

As above, premiums are calculated at a snapshot date, so doing any of these things will not normally affect your premium. Some insurers are prepared to review and possibly lower your premium should you stop smoking. If they will not, and you have given up smoking for 12 months or more, you could consider shopping around for a new policy so that your premium can be calculated as a non-smoker. Similarly, for weight and sports, you could cancel your old policy and get a cheaper one if your circumstances have changed. Always make sure you have appropriate cover in place before cancelling your old policy.

16% of Brits believe that if they die the money goes to their family and they decide which debts to repay

If you die and you have left a will, the beneficiaries will receive the remainder of your estate minus any debts, which must first be repaid together with any inheritance tax liability if applicable. If you have not left a will your estate will be distributed using the rules of intestacy (see below).

Less than 30% of Brits understand what ‘probate' and ‘intestate' mean.
Probate - The legal process of passing on the estate of a deceased person. Contrary to popular belief, you do not avoid the probate process by leaving a will. In fact, the only way you can go to probate is by having a will. Obtaining a ‘Grant of Probate' allows your Executor to distribute the estate according to the instructions laid out in your will, minus any inheritance tax liability if applicable.

Intestate – has nothing to do with any kind of love apples, but is a term that is used when someone dies without leaving a will. In these circumstances, there are strict rules for who gets your cash and assets, and will vary depending on whether you are married and/or have children. There are limits for how much a spouse can get and there is no choice or way of varying what happens, so if in doubt, get a will!

Jeremy Cryer of Gocompare.com folded his hands, arranged his face into an expression of deep concern and said:

"Our research has found that many UK consumers are pretty baffled about what affects their life insurance and what happens to their debts when they die. No one likes to think about what will happen when they die, particularly if it's before reaching a ripe old age, but you owe it to those you'd leave behind to ensure they aren't left in a financial mess when they are trying to pick up the pieces after your death."

Nothing like a cheesy sales pitch cloaked in assiduous concern to make you want to throw up/in the towel/yourself under a train is there?

TOPICS:   Banking   Health   Insurance

15 comments

  • Lothario
    79% of women believe me when I say I'll pull out before spurting.
  • Sicknote
    82% of women believe a soldier when he says "...I love you", just before he forgets to pull out.
  • Whinger
    67% of BW readers believed BW when they said there'd be a prize for the magazine design competition. :(
  • The B.
    99.7%* of HSBC employees in the probate department don't bother to follow any instructions you might have sent them and simply do what they want regardless of the actions. * is based on a made up figure from personal experience
  • Mad H.
    "your credit card provider cannot pursue anyone else for your individual credit card debts, unless it is a joint credit card account." There is no such thing as a joint credit card account
  • Dick
    > 18% of Brits believe that if they die their credit card debts die with them. That is probably true, when you consider how some people have fuck all apart from debts and an iphone.
  • heywood_jablome
    I'd love to inherit an estate. Possibly not a volvo estate though, i'm not dead yet. Dick - Would they not be able to sell the iphone to someone at 35 a month for 18 months till your estate debt is cleared ?
  • PokeHerPete
    I STILL HAVE NOT RECEIVED MY PRIZE FROM THE MAGAZINE COMPETITION. SORT IT OUT!
  • Boris
    When I die the universe will cease to exist so who cares who gets my vast stock of tulip bulbs. You're all imaginary bastards.
  • talkingbollox
    23.4% of all statistics are made up on the spot.
  • Boris
    Of course, you may just be figments of my imagination butI do love you all so much that I will miss you when you all fade into nothingness as I ascend to my godly mantle. I love you w0nky youn unreal fox bummer. I love you PokeHerPete you snidely virtual git. I love you The Real Bob despite the fact that you are clearly not real. But most of all I love dick.
  • catweazle
    Dick, I've got fuck all apat from debts. Now how do I go about getting the iphone?
  • bawbag
    There is no such thing as a joint credit card account in the UK.
  • John
    To get a professional advisor to write a will for you, they will ask you for documents that could be used to open a bank account or take out a loan in your name (under the guise of preventing money laundering) and also a list of all your assets (under the guise of advising you how to avoid death taxes by buying financial "products" that are poor investments). Nearly half the population don't make wills. Go figure.
  • Mike H.
    I'm in debt and can't feed the kids, but I want a new iPhone, TV, blu-ray player, Onlive subscription, iPad, BMW/Audi, bigger house 3rd holiday so I'm off to wank furiously on the bog till I sufer a level 3 cardiac arrest, should be insured for that one right? Looking forward to all this clobber.

What do you think?

Connect with Facebook, Twitter, or just enter your email to sign in and comment.

Your comment