You are here: Home - Uncategorized -

Mortgage borrowers under-insured by an average £45k

0
Written by:
16/05/2017
Mortgage borrowers under-insured by an average £45k

Mortgage debt exceeds the average life insurance pay out, according to Aegon, leaving borrowers under-insured.

It cited figures from The Money Charity, stating that the estimated average outstanding mortgage for the 11.1 million households with mortgage debt in the UK was £119,937 in January 2017.

Yet the latest figures from the Association of British Insurers (ABI) and Group Risk Development (GRiD) reported that life insurance claims paid out in 2016 had an average value of £75,000.

Stephen Crosbie, protection director at Aegon UK, said:This implies that people could be under-protecting themselves based on their mortgage debt alone by around £44,937. Our own claims experience in 2016, reinforces this trend and shows that our life protection customers could be under-protecting themselves by more than £19,000, based on their mortgage debt alone.

“This life protection shortfall could leave loved ones facing a debt that may no longer be manageable on a single or no income.

Review regularly

While buying a house tends to be a key trigger for people taking out protection policies, Aegon said that cover should be regularly reviewed to reflect any changes to levels of personal debt, including mortgages, and also to acknowledge any other key life events, like marriage, new jobs, children or divorce.

Crosbie adds: “No matter the place or time, life insurance never makes for good conversation. No one wants to talk about dying. But we need to turn our perception of life insurance on its head as it’s not all about death, it’s also about providing financial security and peace of mind for those left behind. And it doesn’t have to be an expensive conversation. Life insurance can cost less than a bottle of wine a month.”

Aegon has listed below the key things that people should consider when assessing their protection needs:

  • What’s your total monthly household expenditure?
  • How would you pay for everyday bills and essentials without the main income in the household?
  • Do you have any protection policies already in place?
  • What’s the difference between the amount of protection policies you have in place and all your monthly outgoings (including your mortgage or rent)?
  • How much life insurance do you really need?

In 2016 Aegon UK paid a total of £123.4 million in claims for life (including terminal illness), critical illness (CI) and income protection (IP), helping more than 1,300 families and businesses in 2016.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

How much can you borrow?

A calculator designed to help you understand how much you can borrow towards your property

Your Mortgage Guides

Guide to Offset Mortgages

Download our handy guide to offset mortgages, brought to you in partnership with Scottish Widows Bank

Read More >

Are you on the right mortgage product?

See how much you could potentially save by remortgaging to a different product
Read previous post:
2342116-house-life-buoy
Why it pays to take out critical illness and life cover

The myth that 'insurers will do anything not to pay' is belied by exceptional payout records

Close