Life insurance gap leaves mortgage holders exposed

Almost a third of adults under 55 surveyed by Tesco Insurance said they would be forced to sell their family home if their partner died unexpectedly.

The findings suggest many people in this age group could be financially exposed, with a majority saying they lack either life insurance or savings to fall back on.

Here, Which? looks at how widespread the gap in cover is, how much life insurance you might need to protect your home and the steps you can take to protect your family’s finances.

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How many households don’t have life insurance?

Tesco Insurance surveyed adults aged 18 to 55 and asked what they would have to do to stay financially afloat if their partner died unexpectedly.

30% said they would have to sell their home, 35% said they would have to dip into savings, and 18% said they would need to take on a second job or side hustle.

Among those with a mortgage, 60% said they don’t have a life insurance policy that includes mortgage protection. This means most would have no payout to cover repayments if they lost their significant other. 

The research also found that 80% of mortgage holders don’t have savings set aside for emergencies.

Without a financial cushion or insurance cover, families in this group could struggle to keep up with monthly repayments and risk losing their home. 

• Find out more: best life insurance 2025

What is mortgage protection insurance? 

Mortgage protection is a type of life insurance that pays out if you die during the term of your mortgage. It’s designed to ensure your family can continue making repayments and stay in the home if your income is no longer there.

Without this cover, many of the survey respondents said they would face difficult choices. Some said they could be forced to sell their home, while others expected they’d need to rely on savings or take on extra work just to keep up with repayments.

Mortgage payment protection insurance (MPPI) is slightly different. It covers your mortgage if you can’t work due to illness or redundancy. 

Both products are designed to reduce the risk of losing your home if your finances come under pressure.

• Find out more: do I need life insurance for a mortgage?

How much life insurance do you need to protect your home?

If you have a mortgage, the main purpose of life insurance is to make sure your family can keep up with repayments if you die unexpectedly. The right amount of cover will depend on your circumstances, but there are some useful starting points:

• Match your mortgage balance At a minimum, your policy should cover the amount left on your mortgage.
• Think about the type of mortgage you have Repayment mortgages usually pair well with decreasing term cover, while interest-only mortgages need level cover.
• Factor in wider household costs Bills, childcare and everyday living expenses can add up. Some people choose a policy that goes beyond the mortgage balance for extra security.
• Review your policy regularly Check your cover if you move house, extend your mortgage term or your income changes.

Remember, home insurance won’t protect your family if you die. It typically covers the building or its contents against damage, but it won’t cover mortgage repayments. 

5 ways to secure your household 

The death of a partner can bring not only emotional strain but also financial challenges. Taking a few practical steps now can make it easier for your family to manage household costs and stay in the home if the worst were to happen:

1. Take out the right life insurance Choose a policy that would cover the full balance of your mortgage as well as essential living costs such as bills, childcare and food. 
2. Build an emergency savings buffer Aim to set aside at least three to six months’ worth of household expenses in an easy-access savings account. For example, if your household spends £2,000 a month, aim for £6,000 to £12,000 to cover costs in the event of redundancy or illness. 
3. Review your cover when life changes Check your life insurance policy once a year and after big milestones like buying a home, getting married or having children. Increasing your cover when your financial commitments grow ensures your protection keeps pace with your needs.
4. Make a clear household plan Talk openly with your partner or family about money. Make sure they know what insurance policies you have, where to find important documents, and how to contact providers. 
5. Consider other types of protection Income protection insurance can replace part of your salary if you are unable to work due to illness or injury, while critical illness cover pays out a lump sum if you are diagnosed with certain serious conditions. These policies are not a substitute for life insurance, but they can provide an extra layer of security.

Find out more: many life insurance providers offer ‘perks’, but are they worth it?