With 53% of people in the UK having life insurance, experts are revealing they can often fall short of covering the average new mortgage, potentially leaving people financially exposed.
A workplace policy, which is offered as part of a benefits package, commonly known as ‘death in service’, typically pays out between two to four times the annual salary. However, with the average new UK mortgage now standing at £225,672, Post Office Life Insurance highlights that many workers could be relying on cover that doesn’t meet their financial needs.
The average payout from workplace life insurance ranges from £76,200 to £152,400, meaning a potential shortfall of up to £150,000 when compared to the average mortgage alone, not including other financial commitments such as childcare, household bills, or funeral costs.
Workplace life insurance is provided at no cost to employees and is generally unaffected by pre-existing medical conditions. However, there are limits.
The payout is typically a multiple of your salary rather than a chosen amount and cover is usually limited to employees on payroll; contractors, freelancers, zero-hours, or part-time workers may not be included.
In addition, terminal illness cover usually only applies if you are still employed at the time of diagnosis or death.
Paul Paddock, CEO of Post Office Insurance, commented: “Workplace life insurance is a valuable benefit, but it’s not always enough.
“With the average mortgage now exceeding many workplace policy payouts, families could face financial strain during an already emotional time. Standard life insurance can help ‘top up’ your workplace cover, giving you peace of mind without overpaying. We encourage people to review their workplace policy regularly and consider whether additional protection is needed to cover mortgages, dependents, and other financial commitments.”
