Life insurance should be used for more than mortgages
Wednesday, 02 Feb 2005 12:24
Using life insurance for mortgages leaves loved ones exposed, according to Sainsbury's Bank
Sainsbury's Bank has called on Britons to make sure their life insurance covers more than just their mortgages, as this could leave their loved ones exposed.
The bank is calling on people to remember the true benefit of life insurance - the ability to provide your family with long term financial security should the worst happen.
Research for Sainsbury's Bank reveals that only 16 per cent of people with life cover said they had bought it to protect their family, while 44 per cent of people said they took out a policy to cover a property or remortgage.
This would appear to explain why nearly three quarters of people with life insurance (73 per cent) have less than £150,000 worth of life cover, a figure close to the average mortgage loan in the UK.
Sainsbury's Bank believes that these figures indicate that many people are taking out cover purely to cover their debts, rather than considering how much money their family would need to be financially secure in the event of their death.
According to figures on family spending, a typical family spends over £2,300 a month excluding their mortgage interest payments.
A premature death in the family could leave one parent or a guardian needing to find enough income to cover all the family expenditure while, if they work, potentially also having to spend extra money on childcare during the working week.
Donald Jarvie, Sainsbury's Bank life insurance manager, said: "We are concerned that many people tot up their mortgage and maybe their other debts and base the amount of life insurance they buy on that figure.
"Whilst that might be a reasonable assumption for those without dependents, families should remember that over and above paying off debts, the real benefit of life insurance is that it is there to make sure that your family is left financially secure in the long term should something happen to you.
"With premiums currently so competitive, now is a really good time for families to top up their insurance or to buy additional policies.
"Simply taking a little time now to arrange enough cover could provide you and your family with peace of mind for the future."