Ok, it's not sexy but it's necessary

Rather take a trip to Eurodisney than insure yourself for accidents, death or redundancy? You're not alone, says Christopher Browne

As a nation of blithe spirits, we're far happier splashing out on the latest digital technology, a family trip to Eurodisney or a visit to the movies than getting down to the serious business of covering ourselves for accidents, redundancy or death.

As a nation of blithe spirits, we're far happier splashing out on the latest digital technology, a family trip to Eurodisney or a visit to the movies than getting down to the serious business of covering ourselves for accidents, redundancy or death.

This is borne out in a survey by Direct Line Life that shows that 41 per cent of us have no protection against critical illness, loss of job or death. Though 61 per cent of those interviewed had savings, 38 per cent of the stashaways were less than £5,000 - not enough to sustain the average household for more than three months.

Two other startling facts that emerge are that 30 per cent of mortgagees have no cover to pay off their monthly payments if they or their partner dies, and almost three-quarters of us - or 72 per cent - have no insurance against critical illness.

Yet a recent Bank of England report shows that our spending appetites are insatiable. Bank figures show a rise of £8.9bn in consumer borrowing last September which is the highest monthly total since records began in 1993.

So why do many of us prefer to splash the cash than secure our futures? Complacency and a blind belief in state aid, say those who should know - the UK's lenders, brokers and advisers. "Since the rules were lifted on lenders having to provide protection and life insurance on mortgages, people have got lazy and are not prepared to forage around to find their own insurances," says Duncan MacKechnie, managing director of Direct Line Life.

And half of those polled in the survey say they expect immediate state aid for their mortgages if they fall ill. In fact, they'll receive nothing for nine months. Most also hugely underestimate the sums they'll need to support their families and lifestyles if they or their partner falls ill or dies. The whole idea of cover is just too unglamorous.

But life is cheap. In the past five years, the cost of taking out life insurance has fallen by 40 per cent. It means that many homeowners who bought policies from mortgage lenders could save themselves a tidy sum by switching sources. One of these is Tesco. Two years ago, the supermarket chain put life-cover leaflets in just over 500 check-outs. Since then 100,000 customers have signed up.

Six months ago, it added a mortgage life insurance package and found the take-up rate was even higher. "Life cover is a perfect fit for us. It's family-based, doesn't involve any extra overheads and is almost as easy to buy as a pair of disposable nappies. Insurance has been shrouded in mystique, with people wrongly assuming they can only obtain it via a financial adviser," says Stuart Neil from Tesco personal finance.

There are a myriad of life-cover sources, but it pays to shop around and not just sign up to the first company that gives you a quote. There are two main types of life cover: term assurance and permanent insurance. The first, which can be bought with or without your partner, pays out a guaranteed sum in a set term - usually 20 years. You can also use it to cover all or part of your mortgage. The second type protects you and your family for life and is paid out on the death of the holder or at the end of the policy. You can pay set or adjustable premiums and also borrow against your policy.

Cover really comes into its own when a family breadwinner dies and the other is left to pay the bills, fund the children's education and keep up the lifestyle to which they have become accustomed. If you're single, your needs are less pressing, though insurance could prove a life-saver if you are struck down by a serious illness. "Learning about life insurance should be on every school's curriculum," says Direct Life's MacKechnie. A view borne out by recent figures from LifeSearch, the insurance broker, which shows that the 3.7 million of us who bought from a major lender overpaid by up to 39 per cent. "That's about £1.5bn too much a year," says LifeSearch's Kevin Carr. "Many people assume they need to take out life insurance with the company that gave them a mortgage. If, however, they shop online they can often get cheaper cover, plus free advice."

So when you do decide to log on or make those phone calls, make sure you contact a broker regulated by the Financial Services Authority. This will give you a wider range of sources and greater security. You can check out individual companies on the FSA's register on www.fsa.org.uk. Remember, getting cover will give you peace of mind. Your life could depend on it, too.

Three FSA-approved brokers are: Life Policies Direct (0800 068 5043; www.lifepoliciesdirect.co.uk); Friendly Life (0800 195 9812; www.friendlylife.co.uk) and LifeSearch (0800 316 3166; www.lifesearch.co.uk).

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