New homeowners at risk by opting out of life insurance
According to broker, My Mortgage Direct, in an effort to save cash, homeowners are ditching life cover.
The broker warns that just 20% of new borrowers are opting for life cover to protect their mortgage.
The organisation emphasises the importance of life cover and said borrowers are looking for ways to claw back cash on what they regard as non-essentials and life cover is an easy target.
Cath Hearnden of My Mortgage Direct warns that this is a false economy. Considering the huge financial commitment of a mortgage and what it represents to borrowers’ lives, trying to save a few pounds by going without life cover is a big mistake.
Of course it’s hard to make ends meet in the current financial climate but it will be a great deal harder for one person to manage the mortgage repayments on their own should their partner die, added Ms Hearnden.
She explained that life assurance is not an expensive commitment. In fact premiums have been revised recently and cover can cost considerably less than borrowers might think.
Furthermore, those who already have life cover in place that hasn’t been reviewed for several years could be eligible for a better value policy, either from their current provider or a new deal elsewhere.
A joint policy for a non-smoking couple aged 30 with a £150,000 mortgage could cost around £10 per month. Should one of them die, the policy would pay off the whole of the mortgage, concluded My Mortgage Direct.