Two in five do not have life insurance to cover mortgage debts

Two-fifths of people in the UK (42 per cent) would not have enough life cover to pay off their mortgage, according to new research from price comparison website Gocompare.com.

Unfortunately, the study suggests there is a very real possibility the only thing people leave behind for their loved ones is a large amount of debt.

Meanwhile only 28 per cent of individuals said they have sufficient life insurance and savings to clear their mortgage and other credit, while providing a reasonable income for their family and dependents.

Cost (64 per cent) and apathy (24 per cent) were the two main reasons people gave for having insufficient cover, while over a third (34 per cent) of respondents thought they had left it too late to arrange adequate plans.

Interestingly, 58 per cent of those surveyed said if they had an extra £10 a month they would rather spend it on the National Lottery than put it towards a life insurance scheme, suggesting individuals do not see it as a priority.

Jeremy Cryer, head of new product development at Gocompare.com, said: "It's important to plan ahead and make sure loved ones are financially protected when we are no longer around … Put simply, having a life policy could make the difference between them being able to continue living in the family home or being forced to sell it to pay off debts."

He went on to say how difficult it can be figuring out how much cover is required but advised people to think about buying enough to clear any outstanding debts, including a mortgage and providing a capital sum for families.

It is also important for individuals to periodically review their cover to take into account any changes in their personal circumstances. For example, after re-mortgaging or buying a new home, getting married or having children, people should evaluate the requirements to help make sure an adequate financial safety net is left for dependants.

By Amy White