Huge UK life insurance gap of £2.4trillion

Shocking new statistics have revealed that the UK is a whopping £2.4 trillion underinsured, with the huge gap equating to £100,000 for every person in the region.

According to the report from Swiss RE, a leading life insurance provider in the UK, the most likely people to not have the right level of life insurance, if any insurance at all are those under 35, couples with children and single parents.

The report, which is called the Swiss RE Term and Health Watch 2012 revealed that the gap between the level of cover needed, and the level of cover taken out by the average person in the UK is actually getting greater.

Cheif Executive of Swiss RE, Russell Higginbotham explained, “the industry is faced with the challenge of better communicating to consumers how to alleviate the financial burden placed on families and dependants in difficult times”.

He added that the life insurance protection gap was, “proving to be a long-term problem in the UK”.

The fall in the level of cover people have is quite surprising given the current low cost of life insurance in the UK. According to the report, a healthy 35 year old male could expect to pay around £2 a week for £100,000 worth of life insurance cover, so long as he doesn’t smoke and takes out the policy until he’s 65.

Despite the low price of insurance, last year saw just 1.49 million policies sold in the UK, which was down 3.4%.

As well as life insurance, income protection plans also fell in sales, although only just, with the drop being 0.2%. In the last ten years, income protection cover has dropped by just under 50% however, with many people under covered.

One area where sale have increased is in the whole life insurance and critical illness categories, where 3.1% more people bought critical illness policies, and 7.9% more people took out whole life insurance.

With life insurance being one of the most important forms of insurance you’ll ever take out, it’s vital to make sure you have the right level  of cover so your family will be financially secure should the worst happen to you.

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