There is a £32bn shortfall in UK life cover among first time buyers according to new research
The research from Friends Provident claims nearly a quarter of all homeowners have insufficient life cover to pay off their mortgage debts in the event of their death with first time buyers the worst offenders.
And despite almost three-quarters of property owners (72%) without cover admitting they know they would lose their home in the event of a family tragedy the average payment for term assurance is only £2.10 a week.
According to the research, the main reason for not having cover is a belief that it is an unnecessary expense. Nearly a third of people without life insurance (31%) say they do not feel they need term assurance while a one in three (30%) also reveal they would find it difficult to meet payments while 5% plead guilty to ignorance of the mortgage protection market.
In spite of London’s inflated property prices, Londoners are the least likely to have term assurance - 30% of Londoners are not covered claims the research. The Scottish are the most likely to have organised cover to pay off mortgage debts, says Friends Provident, with only 14% not taking out some form of cover.
The provider says that despite a third of those without term assurance believing it is unnecessary one in fifty adults will experience an untimely death from health complications, accidents or other unexpected events before their retirement. In this event, the research says a further one in eight homeowners (13%) without cover believe their next of kin would be forced to eat into savings to pay off debts while 8% would beg or borrow cash from friends and relatives.
For those who have taken out cover, more than one in ten (11%) homeowners admit their term assurance is not sufficient to pay off their mortgage debt in the event of a breadwinner’s death. Despite a mortgage being the single biggest financial commitment most ever undertake, nearly half of those surveyed (48%) say they failed to seek independent financial advice to ensure their life assurance was linked to their mortgage.IFAonline
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