New research has discovered that many Brits are very confused about the facts and fiction of life and debt.
Gocompare.com has identified the most common life insurance and debt misconceptions that the majority of Brits believe.
About half of the British population (44%) thinks that life insurance does not pay out for suicide. However, the report said that this differs between insurers. In general terms, suicide is covered after the policy has been in force for at least one year.
Uncovering other myths can help you to save money. 42% of Brits correctly believe they should inform their life insurer if they give up smoking. In fact, some insurers are prepared to review and perhaps lower your policy if this happens.
Regarding debt – something that is affecting many Brits these days – the study found that almost two out of ten Brits (18%) believe that if they die, their credit card debts would die with them.
However, this is not totally true because, in case of death, your estate will have to go towards repaying your credit card debts before any assets can be passed on to your beneficiaries. If you have no assets, however, your credit card provider can’t pursue anyone else for your credit card debts.
16% of people also believe that if they die the money goes to their family and they decide which debts to repay. Again, this is largely a myth.
If you die having left a will, beneficiaries will receive the remainder of your estate minus any debts, which must first be repaid together with any inheritance tax liability.
Indeed, debts are something a number of Brits are worrying about in the current financial crisis. Many of them are relying on unsecured loans to pay for them. Of course, no such loan should be taken lightly, and as with any form of borrowing it is important that you are able to meet repayments.