43% of British people don’t have their mortgage protected by life insurance. This is a huge jump from 2006.
Economy has had to change as the recession is affecting families and their budgets are being hit hard, especially when they face redundancy. Recent research* in What Mortgage (3 November 2010) shows that many people have stopped paying life insurance. The research shows that over 7.1 million people have a combined outstanding mortgage balance of PS318billion. This puts their homes and loved ones in danger. A family’s death of the ‘breadwinner’ is a tragedy. But, if this happens, the financial ruin for their dependents can be as simple as not having enough life insurance to pay their mortgage.
The uninsured population was estimated at PS217 billion in 2006. However, this number has risen by 47 percent since 2006 due to the recession. Selling their family home could be the only option for those with large amounts of debt. Although mortgage providers will accept a small amount, if the family is unable to afford the mortgage payments, they may have to sell the home or be evicted.
An average individual with a mortgage and no life insurance owes more than PS44,000. These 32% include people aged 35-44 years old and 34% are between 45-54 years. Life insurance offers peace of mind and is highly valued by most people. It should be sufficient to pay off your mortgage if the worst happens. They will take out sufficient coverage to cushion the financial blows for their loved ones if they are able to afford it. This is particularly important for young families.
Life insurance can be cancelled easily and it is even more difficult to buy again due to the long forms and high premiums. Who can blame someone who receives just PS65.45 per weekly Jobseekers Allowance and chooses to eat before they pay for their life insurance?
It’s a shame that people are forced to make such difficult decisions by unemployment. This creates great anxiety for those who have to struggle to provide for their families. It can take many years for people to pay off unpaid bills or credit blacklisting, even if they are able to keep their house. Unemployment insurance can help to avoid all this. The policyholder will be able to receive up to one year of coverage if they become disabled. This will allow them to continue to pay their most important bills. The policyholder can pay mortgage payments, household bills, and premiums for life insurance so they can focus on finding a new job.
This Unemployment Insurance, also known as Lifestyle Protection or Income Payment Protection, can only be taken out by someone who is employed and their employer isn’t about to cut back. This is why Council employees find it difficult to purchase this type of insurance at an affordable rate. They could have easily purchased Unemployment Insurance online a year ago at very competitive rates. Premiums for those in secure jobs can be as low at PS20 to PS40 per monthly, with a typical PS1000 monthly benefit that covers them if they become disabled.
Everyone working in Britain today is subject to potential redundancy. If an individual does not have several thousand pounds of savings they can consider other options. The majority of people can find PS5-10 per week for what they truly need. Families with very little savings can avoid huge debt by maintaining life insurance coverage and paying their other bills. Unemployment Insurance is an alternative to losing creditworthiness and potentially compromising a family’s financial security in the future. People have greater incentive to take private protection to protect their families and themselves, as the Government has reduced State Benefits.
*Research conducted by Sainsbury’s Life Insurance 2010.