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3 in 10 young adults don’t have Mortgage Life Insurance

A recent survey from Beagle Street found that almost 3 in 10 young adults (28%) don’t have life insurance to protect their mortgage. This leaves nearly 1.7 million people without any financial safety net to help their family to repay their mortgage if they die.

19% of the young people that Beagle Street surveyed stated that they ‘don’t know’ how their remaining mortgage balance would be repaid in the event of their death. There are various reasons why young adults should consider buying life insurance, with the main reason being that these policies are generally cheaper for young people.

In this article, our insurance experts are looking at the findings from Beagle Street’s life insurance survey in 2024. We will also explain how mortgage life insurance works for young adults and why it is often beneficial to buy life insurance earlier in life.

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60-Second Summary – 3 in 10 young adults don’t have Mortgage Life Insurance

UK life insurance company Beagle Street found that over £433billion worth of UK mortgages are not covered by life insurance.

While it’s not compulsory to have life insurance for a mortgage, life insurance helps your loved ones pay off your mortgage if the worst happens to you.

  • Young people will normally pay less for life cover compared to older applicants, as insurers tend to increase prices based on age. This is due to the increased risk of potential health issues as we get older.
  • Around 23% of people asked stated that they don’t see life insurance as a priority during the cost-of-living crisis. While this is fair, it can actually be more important to have extra financial protection during times like this.
  • Around 1 in 5 people asked stated that they’d never thought about buying life insurance, despite having a large financial commitment like a mortgage.
  • Mortgage life insurance is available from most of the UK’s top life insurance companies, which includes popular insurers like Aviva, Vitality, and Legal & General.

Mortgage life insurance is a policy which will pay out a cash lump sum to repay your mortgage when you die. The amount of cover (£s) will reduce over time, so that your policy matches your remaining mortgage balance.

It was once a requirement from mortgage lenders that you needed to have life insurance to be approved for a new mortgage. This isn’t the case now, but having life insurance provides peace of mind that your family can afford your mortgage repayments without your income.

Life insurance should work in the same way, regardless of how old you are when you apply. The main difference is that younger people will often be offered much lower prices than older people, as insurers normally view older applicants as being more likely to claim within their policy term.

Beagle Street recently discovered that 28% of young adults with mortgages do not have a life insurance policy. During this survey, Beagle Street spoke to 2,000 young homeowners between the ages of 18 – 40 years old.

Some of the main findings from this survey were:

  • 23% of young adults with mortgages don’t consider life insurance to be a priority.
  • 22% of young adults with mortgages hadn’t thought about buying life insurance.
  • 22% of young adults with mortgages said that they thought that they didn’t have enough money to pay for life insurance due to the cost-of-living crisis.

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While it’s hard to say if you ‘need’ life insurance, you should consider how your loved ones (e.g. partner or children) would cope financially in the event of your death. A mortgage is the biggest financial commitment in most people’s lives, so it’s important to think about how this would be repaid if you died and could no longer contribute to this.

A lot of people make the mistake of thinking about life insurance for the first time when they are in their 40s, 50s, 60s etc. While cover can still be available then, it will usually cost more than if you had applied for cover 10 or 20 years earlier.

Benefits of buying life insurance when you are young:

  • The price of life insurance increases as you get older, with 40-year-olds paying significantly more than 18-year-olds.
  • You can ‘lock in’ the price of your policy while it is cheaper if you choose guaranteed premiums for your policy.
  • Policies can cost as little as £5 per month for £100,000’s in financial protection.
  • Less likely to have medical issues, which can cause life insurance to be more expensive.
  • Wide range of policies and insurance companies to choose from.
  • Many insurers provide lifestyle rewards and discounts that can benefit young and active customers (e.g. gym discounts).

Mortgage life insurance is sold by most UK life insurance companies, so you will have a variety of options to choose from. It isn’t always simple to understand your best options for life insurance, which is why many consumers choose to buy their cover with the help of an experienced broker.

Our specialist life insurance experts can explain which insurers are best suited to your situation and the type of life insurance that you need. For free, impartial advice, you can call 0800 009 6559 or CLICK HERE.

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