New research has suggested that almost one third of borrowers taking out a mortgage have no associated life cover, according to Defaqto.
The research compared figures from the Council of Mortgage Lenders (CML) with figures from the Association of British Insurers (ABI). Whilst the CML recorded more than 900,000 new mortgages last year, just fewer than 640,000 new mortgage-related life insurance policies were recorded by the ABI.
By not taking out any form of life cover, this could leave a borrower’s partner a risk of serious debt after their death. Following a partner’s death, if there is no provision to cover the mortgage, many partners struggle to cope financially and in many cases have to leave the family home.
The author of the report, Defaqto`s Insight Analyst for Protection Ben Heffer commented:
“In some cases, there may be prevailing individual circumstances that dispense with the need for life cover. However, the figures suggest that there are many people taking on debt whose loved ones would have no means of paying it off for them if the worst happened.”
When taking out a mortgage, a qualified mortgage advisor should run through such eventualities to ensure not only that a potential borrower can meet their mortgage repayments but also that they have thought of what may happen after their death. Some people can find financial preparation for death somewhat morbid but life insurance can provide cover to ensure that in the event of the worst, there is one less thing to worry about.