The recession and what it means for your life insurance

As of Thursday, 15th February 2024, it’s official: the UK is in a recession. But what does that mean for your finances?

What’s going on?

In simple terms, a recession is a significant, widespread, and prolonged downturn in economic activity.

The last UK recession was in 2020, during the pandemic. Although this recession lasted six months, the 20.4% GDP fall between April and June 2020 was the largest on record.

The recession before that began in 2008 due to the global financial crisis and went on for 15 months.

What does a recession mean for you?

Figuring out how a recession affects UK workers can be tricky, but looking back at past recessions can give us some clues.

  • Many companies could be forced to make redundancies and cut down on staff to slash costs, especially when dealing with rising expenses for goods and services.

  • As prices for the basics keep rising, many people are less likely to have less disposable income to spend on extras.

  • If you’re on the hunt for a new job, finding one could become more challenging.

  • Plus, if you’re already in employment and hoping for a salary bump to help with the rising cost of living, it might be tricky since businesses could be tightening their belts.

What it means for your life insurance

A recession can play havoc with your finances.

But if you already have a life insurance policy, it’s one thing you don’t need to worry about. When you take out a policy, your life insurance premium will be locked in, meaning you’ll pay the same monthly price throughout your policy (unless you cancel).

Why do you need it now more than ever?

Who knows how long we will be in this recession (let’s hope it’s nothing like 2008), and we can’t predict how it may affect your employment.

But there’s one thing we are 100% certain of - a recession is not the time to cancel your life insurance policy. 

In a time where things may feel turbulent, your life insurance is a sure thing. So unless you cancel your policy - it’s not going anywhere.

The importance of a policy

Many jobs will provide you with death-in-service (a type of life insurance offered by employers).

Having death-in-service is good. But it’s important not to rely on it because if you lost your job because of the recession, you’d also lose your death-in-service benefit, meaning you’d have no cover.

Having a personal life insurance policy is essential. Because if you were to lose your job (touch wood), you’d be able to rely on your policy.

How to use your policy during a recession

Your life insurance policy isn’t just for the payout - you can use it for much more.

Many of the UK’s top insurers include free additional benefits when you take out a policy with them, which you can use throughout your policy at no extra cost.*

These benefits range from 24/7 GP appointments, to mental health support, and even personalised fitness plans. They’re designed to support your health and well-being. Your extra benefits ensure that your policy isn’t just standing still but that you can use it the whole time you’re covered.

If anything happened

A life insurance payout can make all the difference in a healthy economy. But in a recession, it’s even more essential.

If the worst happened in a recession, the lump sum from your life insurance policy could be transformative for your loved ones.

If you cancel your policy, getting it again later will cost you more. So, the smart money move is to keep your policy in place.

With a life insurance policy, you’ll have peace of mind during and after the recession without sacrificing your monthly premium.

*Benefits are not contractual and may be removed at anytime