Research by Final Duties, the UK’s most experienced probate brokers, has revealed the potential cost of failing to secure life insurance and what it could mean for the average household, as those without a policy in place risk seeing the percentage of their annual household income required to cover their outgoings climb from 38% to 61% as a result of the loss of a loved one.
The research by Final Duties estimates that: –
- The average cost of a life insurance policy comes in at £488 per year, or £41 per month. With the average UK salary of £35,404, this means that life insurance costs just 1.4% of a person’s income on an annual basis.
- Despite this low cost, it’s thought only 35% of the UK population is estimated to have a life insurance policy. That works out at roughly 18.6 million adults aged 18+.
- The research by Final Duties also estimates that the average cost of running a household in the UK currently sits at £26,716 per year for the average household of 2.4 people, based on core expenses such as mortgage repayments, groceries, utilities and communications.
- With the average UK person earning £35,404, this equates to 38% of a joint estimated household income of £70,808.
- However, when you lose a significant other, this halves household income. While household outgoings may also reduce, Final Duties estimates that the annual outgoings of the average household of 1.4 people would still sit at a sizable £21,540.
- Therefore, without life insurance, your average annual running costs would jump to 61% of your annual household income of £35,404.
- For the majority of people, life insurance is used to help pay off outstanding mortgage debt. The average life insurance payout is currently estimated at £75,578, while the average outstanding mortgage debt per household is £129,130.
- Therefore, having a life insurance policy in place can help reduce the mortgage debt burden from £129,130 to £55,552, a far more manageable sum for surviving loved ones to handle.
- This reduction of mortgage debt also reduces the annual household running costs for a household of 1.4 people to an average of £15,035 per year, which would require just 42% of the average annual income of £35,404, instead of the estimated 61% without a life insurance policy.
You can find the full release below, but please get in touch for any further comment or info.
