Over two-thirds of people in UK do not have a life insurance policy

New research shows a worrying amount of families are not financially protected should the worst happen to a parent.

By Bob Atoo
August 23, 2018

More than two-thirds of people in the UK don’t have a life insurance policy, as new research has found that just 30% of people have a policy. This amounts to 8.1 million households currently having some form of life insurance protection – significantly less than the UK’s total 11.1 million mortgaged properties.

Life insurance, which can pay out a lump sum on death, means that if the worst happens to a parent then the family finances can be taken care of. In most cases, that means the mortgage and household bills can still be paid if the main household earner passes away.

However, as this latest research by comparison site Compare The Market has found, there are a lot of families in the UK at financial risk – which could lead to having to sell the family home if they can no longer afford the mortgage repayments.


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As the average mortgage debt and unsecured debt (e.g. credit cards) currently stands at £57,830 per person, many families would likely find themselves in great financial difficulty if a parent were to die.

What life insurance do you need?

There are a lot of different types of life insurance you can buy, with level term life insurance being the most well known. This type of cover allows you to select both the amount of cover you need (i.e. how much the policy will pay out) and the length of time the policy will last (often until the mortgage is paid or until the children have grown up and are no longer dependant on you). If you die during the policy term, then your family will receive the payout. If not, the policy will simply run its course and then end after the agreed term/

Alternatively, you could opt for a decreasing term life insurance policy. With this, the payout amount decreases over time which means the monthly premiums are lower than for a level term policy. If you only want a policy to cover your mortgage, which reduces with time as you slowly pay it off, then decreasing term life insurance might be a cost-effective solution.

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There is also whole of life insurance, which covers the policyholder for the whole of their life and then pays out when they pass away. As this policy is guaranteed to pay out at some point, the premiums are more expensive than a term life insurance policy – so it is more commonly used by people to cover smaller amounts such as funeral costs.

According to figures from the Association of British Insurers, the average payout for a term life insurance policy in 2017 was £78,323, compared to £4,511 for whole of life insurance policies.

Average cost of life insurance premiums

Life insurance premiums are calculated based on several different factors e.g. how old you are, whether you smoke, what job you do, your health (e.g. any conditions such as diabetes) and so on.

Typically, the younger and healthier you are when you take out the policy the cheaper the monthly premiums will be. A healthy, young, non-smoker can expect to pay around £10 or less a month for life insurance, whereas a 40-year-old smoker could find those costs doubling or even tripling depending on other factors.

Therefore it is advisable to arrange a life insurance policy at your earliest opportunity, but that doesn’t mean it’s too late. You can keep the costs of life insurance down by shopping around for the best quote that suits your individual needs – something we can help you with:

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