Mortgage debt risked due to insurance `over-estimates`

28 August 2008

Households who experience a sudden loss of income could be risking mortgage arrears and other debt problems if they do not have appropriate cover, a financial services company has indicated.

According to research carried out by YouGov for Legal & General, nearly two-thirds (65 per cent) of people surveyed were over-estimating the cost of taking out £150,000 worth of life cover.

The research also found 35 per cent thought adding critical illness cover to the insurance was more expensive that it actually is.

Commercial director for housing at Legal & General Karen Blatchford said the company was "concerned" about the findings, as life cover can start from £6 a month.

She added: "People may wish to consider covering not just their mortgage debt, but their family expenditure and bills.

"Most families would really struggle if there was an unexpected drop in the household income."

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