1 in 4 UK mortgage holders have no life insurance
9 February 2016
New research shows that 1 in 4 UK mortgage holders do not have life insurance. The research also found that only 1% of the UK population considered their life to be their most valuable asset, instead placing more value on their house (40%), car (10%) or even technology such as their smartphone (5%).
Additionally, a third of those who have a mortgage and young children have no substantial savings to fall back on.
Tim MacIvor, Head of Customer at Tesco Bank said:
"With the UK seeing a 7% increase in mortgage holders and an overall decline of 21% in those taking out life insurance policies, it’s important we encourage sensible, practical conversations about financial planning – both for life and for death – so customers can help their families avoid unnecessary financial hardship. Taking appropriate steps to make sure your finances are in ship shape will give peace of mind that your loved ones can cope if you are no longer here to help them."
Tesco Bank has developed the following short guide of what customers should think about when buying life insurance:
Type of life insurance
Different types of life insurance are available and you should look at which one is right for your needs. There are many types of life insurance, but the most popular include:
- Level term - this means the amount paid out on death is fixed over the lifetime of the policy, but the purchasing power will be reduced by the effect of inflation
- Decreasing term - this decreases the amount paid out over the lifetime of the policy broadly in line with mortgage or loan repayments
- Joint plans - joint life insurance cover is one that insures two lives. It usually pays out when the first person dies (commonly called 'first to die') within the term of the policy and at that point, the policy will then end.
The amount you pay for life insurance every month depends on a few factors including:
- Level of cover required
- Whether you smoke or have previously smoked
- Health (your current health, your weight, your family medical history)
- Length of term
Determine how much cover you will need
You can work this out in three quick steps as suggested by The Money Advice Service*:
- Step 1: First, add up your debts (including mortgage, credit cards and personal loans) and expenses you want the insurance to cover (your basic monthly outgoings and any other costs).
- Step 2: See what kind of cover you already have (i.e. if the benefits package from your employer includes a ‘death in service’ pay-out).
- Step 3: Calculate the cover you need. When you have these two figures, take away the benefits or cover you already have from the total amount your dependents need – the result is the amount of life insurance cover you should consider taking out. Alternatively, a common rule of thumb is to multiply your annual income by 5 or 10.
Tesco Bank also offers an online calculator to help customers get the right level of cover for their needs. http://life-cover-calculator.tescobank.com/
- You can get life insurance quotes from a variety of sources, including comparison sites, insurers, banks and specialist brokers, however it’s important to work out the type of insurance that is right for you and how much cover you might need.
- Make sure the cover is right for you and read the documents carefully so you know what is and isn’t covered. Ask your insurance provider if there’s anything you’re unsure of.
- Keep your cover up to date. You should review your policy if your needs or circumstances change, for example having another child or taking out a new mortgage.
- If customers are unsure of what best suits their needs, they should consider taking financial advice.
- Remember, you won’t get any money back if you stop paying or cancel your policy.
For more information on Tesco Bank’s Life Insurance, please visit www.tescobank.com/life-insurance/
For more information and media enquiries please contact:
Tesco Bank press office
+44 (0) 131 274 3630
Notes to editors:
Research undertaken by eDigital on behalf of Tesco Bank. Data generated between 18th December 2015 and 14th January 2016 (1,018 responses).
Tesco Bank’s goal is to make banking and insurance easier and better value for people who shop at Tesco. We’ve been around since 1997 and today we help more than 5 million customers manage their money every day. Our 4,000 colleagues serve our customers seven days a week from our three main centres in Edinburgh, Glasgow and Newcastle, and we are also available through online and mobile banking 24/7. Tesco Bank participates in the Chartered Banker Professional Standards Board.
Tesco Bank is a trading name of Tesco Personal Finance plc. Registered in Scotland No. SC173199. Registered Office: 2 South Gyle Crescent, Edinburgh, EH12 9FQ