Life insurance – we have the Romans to thank
Written by Lynda Calver on August 03, 2015.
In the Monty Python epic, Life of Brian, one of John Cleese’s characters, Reg, famously asks his cohorts ‘Apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, a freshwater system and public health... what have the Romans done for us?’. It is certainly a formidable list of achievements but I have yet another to add: life insurance.
The Romans believed that those who failed to bury their dead in the proper fashion would be plagued by unhappy ghosts and, wanting to avoid that prospect at all costs, formed ‘burial societies’ or guilds whose members would club together to cover the funeral expenses of the dead if they had no family to pay. Under the emperor Augustus, these burial clubs became a more organised affair for soldiers, who had part of their salary deducted at source to contribute towards the funeral expenses of their comrades. Later on, a gift of a sum of money was also given to the family of the deceased.
These days, you can’t rely on your colleagues to foot the bill of your funeral and look after the family you leave behind, which is where the insurance industry comes in. Life and other types of peace of mind insurance are not for the benefit of the person whose life is covered, but rather to protect wealth and guarantee the financial security of the loved ones who survive them. Basically, if you have dependents, in the form of a spouse, child, life partner or parent, you need life insurance to avoid what can be the devastating fallout of death or serious illness and to protect your family financially when you are no longer around or to do so.
And yet a huge percentage of people are putting their families at risk by not having any. Figures from the Association of British Insurers (ABI) show that in 2012, [less than a quarter of households were protected by life insurance] https://www.abi.org.uk/Insurance-and-savings/Industry-data/Key-Facts-2014/Life-Insurance). It is a similar story in the US where the number of households covered has fallen from 72% in 1960 to 44% in 2010. The figures are even lower for critical illness cover and income protection even though during your working life you are far more likely to suffer an illness such as stroke, cancer or heart attack than you are to die, and the financial consequences could be just as bad, if not worse.
Cost could be a factor in these low figures, although in reality life insurance is a very affordable product and studies show that it is significantly less expensive than many people think. Another reason is that it is just one of those jobs on our ever-increasing to do lists which just never gets to the top. Sadly, for some who adopt the ‘I’ll do it later’ approach, an unforeseen tragedy occurs before ‘later’ arrives and untold financial stress is the result.
A third factor which possibly discourages people from taking out peace of mind insurance is the mistrust of the financial industry which is a common feature of our times - although mis-selling is probably as old as life insurance itself. No-one wants to be ripped off and some avoid the possibility by simply not purchasing the product. While caution is advisable, that is as nonsensical as not buying a car because you might be in a crash.
Finally, some people are put off by complicated terminology as well as lengthy, unclear contracts and terms and conditions which they are not prepared, or able, to sit down and decipher. The majority of people struggle to understand the difference between whole of life and term insurance, without getting into the more complicated terms which may feature in a policy document. It’s easier just to avoid the subject altogether.
The fact is however, that peace of mind insurance policies are a lifeline to thousands of people every year. Figures from the ABI show that 270 families per day in the UK received payouts from their life insurance, critical illness and income protection policies in 2013. That money will have helped many of those families to avoid falling into financial hardship or having to make significant changes to their lifestyles as a result of the death or serious illness of a family member.
If you have been procrastinating about putting in place life insurance or other forms of peace of mind cover, now is the time to stop and take action. An independent financial adviser such as myself can help you navigate your way through anything you find difficult and advise on the best products for you. [Infinity have also produced a downloadable guide] C:\Users\USER\Downloads\expatinsuranceconsumerguide.com)which will provide answers to many of the questions that you have about the very best way to protect your wealth for the wellbeing of your family. One day you might be thanking your lucky stars that you did – and the Romans while you’re at it for yet another life-changing invention!