Mortgage holders under-insured by £31,500 on average - Sunlife

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The average life insurance payout in the UK is £51,500 which would only cover 62% of the average outstanding mortgage (£83,000), according to research from Sunlife.

For people taking out new mortgages, the gap is even greater - £51,500 would cover less than a third (31%) of the average new mortgage of £167,000, the research found. 

Almost a third (29%) of people take out life insurance when they take out a mortgage, while nearly a quarter (23%) take out cover after the birth of a child.

Dean Lamble, managing director at SunLife said: "Although the UK average life insurance payout is just £51,500, for our Family Life Insurance term product, the average cover that new customers are taking out is £116,692, which is 40% more than the typical outstanding mortgage.

"Yet that in itself is very revealing - people are treating life insurance like a type of mortgage protection. Of course, if for example the breadwinner in a family was to die, being able to pay off the mortgage would be a big help.

"But, while that would take a significant burden off the family, it wouldn't leave any money to pay the ongoing household bills, provide an income or mean the everyday things could carry on."

SunLife has also revealed that it launched a free, interactive life insurance calculator to help families work out how much money they would need to maintain the lifestyle they have now if the main breadwinner were no longer around to provide for them. 

Further reading: 

Former LV= boss Mark Jones joins Sunlife


 

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