Many people underestimate life insurance payout

Research carried out by insurer SunLife has found that the average life insurance payout is £51,500, significantly less than the average outstanding mortgage, which is £83,000.

This represents a staggering £31,500 shortfall, which will likely cause significant concerns for bereaved families. The statistics from SunLife indicate that people may be choosing an insufficient amount of cover, as we worry about not over-insuring and paying a higher premium each month.

Life insurance is usually taken out in order to protect the family if the main breadwinner passes away, however, these figures clearly indicate that families are not as protected as they would expect, and arguably need.

It is even worse for those taking out a brand new mortgage, with the average one worth £167,000. The average life insurance payout would therefore cover just a third of this mortgage cost, placing the family in quite serious financial difficulties if a loved one passed away.

“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,” said Dean Lamble, SunLife’s managing director.

Related Articles