Financial pressure on
consumers in the UK is being reflected in many ways, not least of
which appears to be neglect of life insurance. This is indicated by
a study by Sainsbury’s Bank’s life insurance unit which shows that
there has been 47% increase in home mortgages not covered by life
insurance since January 2006.
Overall, the findings by
Sainsbury’s indicate that 7.1m people with a collective outstanding
mortgage balance of £318bn ($509bn) have no life insurance to cover
on their mortgage. The research also indicates that on average
those with no cover are personally responsible for an outstanding
balance of some £44,000.
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Absence of cover is prevalent
among all age groups. Among younger mortgage holders in the 35- to
44-year-old age group 32% have no life cover, while in the 45- to
54-year-old age group 34% have no cover.
The findings are supported by
a parallel study conducted by Ben Heffer, an analyst at financial
research company Defaqto.
According to Heffer, the
protection gap is significant. For example, in 2009, 925,000 new
mortgage advances were made but only 637,000 mortgage-related life
assurance policies were written.
The mortgage market and
consumer debt as a whole represents a “golden opportunity” for
insurers to expand sales of protection products, stressed
Heffer.
