Almost three million mortgaged households unprotected by life insurance
At least 2.97 million families living in properties across the UK do not have life insurance cover to ensure that their mortgages are paid off should the policy holder pass away, Compare The Market has found.
The lack of life insurance protection is particularly concerning given the growing levels of mortgage debt and unsecured debt, such as credit cards, across the UK which currently averages £57,830 per person.
Dan Hutson, head of Life Insurance, Compare The Market, said: “Life insurance should be considered essential for those with a mortgage.
“It is concerning to see that so many people in the UK with a mortgage do not have protection, meaning family members, dependents or beneficiaries could sadly be saddled with debt should the worst happen.
“For those with life insurance, there are a number of ways in which you can make sure you’ve got right cover.
“First and foremost, shopping around ensures that you are on the best deal possible. It’s also worth making sure you regularly review your policy – for example, although life insurance tends to get more expensive as you get older, making positive life changes, such as quitting smoking or losing weight, could potentially bring your premium down.”
Life insurance is not a compulsory insurance product but is often recommended by mortgage providers to ensure that the value of the loan could be paid off in the event of the policy holder’s death. This protects family and loved ones from the financial strain of picking up the cost.
Less than a third said that they had a life insurance policy and of those that did, 79% had never switched provider, potentially meaning they are paying over the odds for a policy. And people with a life insurance policy pay an average premium of £22.45 per month.
Consumers had bought life insurance policies through a variety of different channels, with a quarter of people (25%) going through a broker, and a similar figure (24%) doing so through a mortgage provider, bank or building society.
This means they could be on a less competitive deal and paying over the odds. Only one in five (21%) said they sourced life insurance from a comparison site.