Andrew Perryman, sales director at bestdealinsurance.co.uk, said: “It is a worrying thought that probably 99% of homeowners think that they have made adequate financial provision for their dependants in the event of their death.
“The sad fact however is that, in the event of the death of the major income earner, while the mortgage will be paid off, the dependants will still have to find the money to pay for other home and lifestyle related costs and could eventually be forced to sell the very home that the insurance was taken out to protect.”
Andrew explained that while a mortgage is probably the biggest monthly commitment that homeowners have, all the associated costs such as maintaining the home, insurances, other debt such as loans, credit cards or hire purchases etc will often cost double the amount of the mortgage.
“Having your mortgage covered at 100% in the event of the death of the major breadwinner may seem like ample protection but in reality, the average homeowner will be as much as 60% underinsured” he commented.
He added that 99% of homeowners think that with the mortgage paid off in the event of their death, their loved ones will be left financially secure. “But what they don’t realise is that the mortgage cost is probably just a third of all their monthly outgoings. And if the dependants cannot cover these costs, then inevitably they will be forced to sell their home.”
Andrew has urged homeowners to review their life insurance cover arrangements to ensure that they have adequate financial protection for their loved ones. He suggests that homeowners also look at other products as a solution such as Family Income Benefit which provides dependants with a tax-free annual income from the time of the policyholder’s death to the end of the policy term.
“With life insurance premiums cheaper now than they were 10 years' ago it doesn’t have to cost a lot more to have the peace of mind that your loved ones will be financially secure in the event of your death” explained Andrew.
“The most important thing is to get independent advice from a specialist, rather than just shop around for the cheapest quote. Advice is free and that way you can ensure that you’ll get the right level of cover at the best price.”
