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One in three mortgage borrowers not taking out life cover

26
Aug

Almost one-third of new debts are not backed with life cover, according to a report by independent financial research company Defaqto.

The Council of Mortgage Lenders said there were 925,000 new mortgage advances in 2009, but the Association of British Insurers recorded only 636,973 new mortgage-related life assurance policies.

Ben Heffer, author of the Defaqto report, said:

“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.

“The protection gap does not just apply to life cover but is also a real problem when you look at income replacement products, with so little income protection being sold.”

Shire Financial Management strongly recommend that each family member should be protected against the prospect of having to maintain substantial debts when a breadwinner dies or becomes unable to work for a protracted time, due to illness, injury or unemployment.

It is surprising that people overlook the fact that the lifestyle one achieves is maintained by one thing – Income. Once part (or all) of that income is lost, so is the lifestyle, which may include losing your Home. Protection premiums are comparatively low but the risks of being unprotected are enormous!

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