According to newly unveiled research almost two-thirds of UK mortgage holders have no life cover, and half of those who do are inadequately insured to cover the outstanding balance of the home loan.

These findings have prompted real concern at the financial burden that may be placed on families and partners left behind after the unexpected death of a major earner. But, despite the fact that many people are unaware of the dangers of not having sufficient life cover there is also evidence that those who do realise its importance simply can't afford it because of rising mortgage costs.

Mortgage brokers John Charcoal have revealed that 59 per cent of mortgaged homes have no life cover at all, while from the remaining 41 per cent, at least half are inadequately insured.

Homeowners who have no dependents or family and therefore for whom life cover would be a costly and unneeded expense are included in the figures, but are not considered to be in the majority. However, for the rest of the borrowers the implications could be devastating. If someone paying for half or more of the mortgage dies unexpectedly the remaining borrower faces the real prospect of losing their home at worst, or facing a financial crisis just when they are ill-prepared to deal with one.

It appears that as homeowners compare life insurance premiums to other day-to-day living costs they are not considering it worthwhile. So, despite the cost of cover falling over the last few years mortgage holders are turning their back on life insurance.

Many reasons are quoted as being the prime reasons for not taking out life cover, but one irrational one seems to be people's reluctance to consider their own untimely demise. However, if that person has one or more dependents it will be those left behind that have to face the reality of living under reduced financial circumstances.

Another more understandable reason for declining life cover is that many people, especially those getting a mortgage from a broker consider the life insurance discussion to be a ‘hard sell'. They have seen the news stories about commissions from insurance sales, and many believe it is an unnecessary expense and one that they have not factored into their calculations when working out how much they could afford for their house purchase.

However, many more homeowners are needing to cut back on their expenditure as a result of the credit crunch and costs regarded as non-essentials are first to be cut back. Unfortunately, for too many that includes life insurance premiums, forcing many to abandon their policies and leave their dependents in real danger of financial hardship if they die unexpectedly.

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