1.5 million households may not have enough life cover to pay off the mortgage if either partner were to die, according to new research from comparison website Gocompare.com.
Only a quarter said they have sufficient financial protection and savings to clear their mortgage and other debts and to provide an income for their family and dependent relatives in the event of their death.
Many rank National Lottery above life insurance
The survey of 3,000 UK consumers found that 17% were worried about the financial impact of their death on their family. However, if they had an extra £10 a month to spend, the majority (65%) would rather play the National Lottery than buy life insurance.
The survey also revealed that cost (34%) and apathy (25%) are the main reasons people give for having insufficient cover, while 9% were unsure how to buy more cover.
An income protection policy could be equally vital
Which? principal researcher Martyn Saville commented: ‘If you have a dependent family, life insurance is a must, not only to pay off your mortgage and other debts, but also to replace your income if you die.
‘Level-term life insurance needn’t be expensive and can offer peace of mind that your family will be provided for if you die. The good news is that many employers offer death-in-service life insurance, often of around four times your salary, so you might find you do already have some cover.
‘What many people fail to consider is what would happen if you fell ill or were injured and therefore unable to work. While life insurance will pay out if you die, the costs incurred by your family if you were unable to work could be much higher: not only would your income need to be replaced, but there may also be additional costs for medical treatment, alterations to your home and a cut in your partner’s own income if they need to give up work to look after you.
‘While you’re considering life insurance, think about taking out an income protection policy as well, which would pay out a regular income if you are unable to work.’