Homes on the line as borrowers ditch life cover to save cash

Homeowners are exposing themselves to massive risk by rejecting life cover in a bid to cope with rising prices and reduce their monthly outgoings.

Only one in 5 borrowers is signing up for the essential protection of life assurance along with their new mortgage deal, according to broker My Mortgage Direct.

As family budgets feel the squeeze from rocketing prices for necessities such as fuel, energy and food prices, borrowers are looking for ways the claw back cash on what they regard as non-essentials – and life cover, unfortunately, is an easy target.

But it’s a false economy, warns Cath Hearnden of broker My Mortgage Direct.

“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,” she says.

“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.

“Life assurance is not an expensive commitment. In fact premiums have been revised recently and cover can cost considerably less than borrowers might think.”

And 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.

For example, a joint policy for a non-smoking couple aged 30 with a £150,000 mortgage could cost as little as £10 per month. Should one of them die, the policy would pay off the whole of the mortgage.

“People don’t think twice about insuring their buildings and contents or even pricey gadgets such as their ipod or Blackberry but will scrimp on insuring the very means of paying their mortgage – their lives!” she adds.

My Mortgage Direct, along with sister company IFA Hearnden Associates, is able to look at the whole of the life cover market and streamline clients’ financial arrangements to maximise potential savings whilst minimising exposure to risk.

For more information, visit mymortgagedirect.co.uk.