Young snub life insurance as '25 per cent are ripped off by insurers'
Published On 4 April 2007
The number of young people choosing to buy life insurance - and insurance that protects their income should they become ill - is falling steadily.A report from LifeSearch shows that the number of people aged under 35 who are opting to purchase some form of life cover dropped by five per cent between January 2006 and the first month of the year.
Just 31 per cent of all protection policies written by LifeSearch during this period were for people in this age group.
The findings also illustrated that young people do not seem to be making sensible choices when buying life insurance policies. Those people aged between 18 and 29 who did purchase policies were more likely to choose to protect their lives (74 per cent) than their income (13 per cent).
The lack of knowledge that young people possess about insurance was reflected in the fact that only 12 per cent of the 18-29 group thought they had brought an insurance product that was most suitable for them - instead, most (37 per cent) opted for cover based on the price alone.
"This shows a worrying trend that the UK protection gap will continue to grow," said LifeSearch's policy adviser, Matt Morris. "Although the average age of first-time buyers is probably rising, many younger people still have debts, mortgages and families that need financial protection in the event of the main income provider being unable to work."
However, new research from insurance website BestDealInsurance.co.uk, suggested that young people could be right in opting to reject life insurance deals.
According to the website, many life insurance providers are increasing the premiums they charge when customers reveal that they have what are often relatively minor ailments.
"It is scandalous just how many consumers are getting hammered by their life insurer for so-called health risks. For example, if you want insurance and a family member has multiple sclerosis some companies will impose a limitation on to what you are covered for," David Thomson, the chief executive of the company, said.
Mr Thomson explained that a decade ago, approximately 80 per cent of people would have been able to take out life insurance without loadings changing the standard premium rate.
"Yet now - despite the great advances in medicine, earlier detection methods and increased survival rates for people who have suffered from a serious illness - only 60 per cent of us can expect not to have our premiums hiked up," he explained.
This means that one in four people who try to take out a life insurance policy face being charged excessive rates. Mr Thomson added that this was often simply because the companies were "using any minor health ailment or family association as an excuse to bump up" prices and increase their profits.
