Going under cover: Brits underestimate how much they’re worth by up to £140,000

New research by leading price comparison website MoneySuperMarket reveals that Brits underestimate their life insurance requirements by almost £140,000. The study asked respondents without life insurance cover how much they think they would need and compared those figures to existing life insurance data1.

Estate agents believe they would need just £35,000 of life insurance cover, a whopping £138,095 less than the average cover amount taken out by their colleagues who have an existing policy.

This is followed by childcare workers who underestimate their insurance needs by £97,315. Their estimate of £15,000 is seven times lower than their actual average cover amount of £112,315.

Yet, in the world of art and design, employees estimate they would need more than a quarter of a million pounds (£258,333) of cover, despite the average amount for people in this sector being £141,452.

Additionally, the findings reveal that men believe they need 25 per cent more life insurance cover than women, at £124,533 and £98,629 respectively.

Worryingly, almost half (49 per cent) of those without life insurance are unsure about how much cover they would need. They estimate that £113,009 would be sufficient, but with the average UK mortgage amounting to £123,4232, this could leave people with a considerable shortfall.

 

Kevin Pratt, consumer affairs expert at MoneySuperMarket, commented:

“Life insurance – specifically term insurance – pays out a lump sum or a regular income if you die before a certain date. It’s there to settle any debts you may have, principally your mortgage, and to provide money for your dependants. It’s an absolutely crucial foundation for family finances, but millions of Brits either don’t have it, or don’t have enough.

“Determining what figure you require isn’t a straightforward process and it is important to consider everything from mortgage repayments to personal loans to your regular household bills when trying to work this out. And don’t forget other expenses such as children’s education costs, whether that’s a school trip, fees or getting through university.

“As a rough outline, cover equal to 10 times your annual salary is suggested. However, everyone’s situation is different so it’s always best to consider your own needs in detail. And it’s not just breadwinners who need cover. Money should be available if the person who looks after the home dies so that alternative arrangments can be made for the work they do.

“It’s not a happy topic to think about, but the financial consequences of not having insurance in place can be devastating.”

 

Visit MoneySuperMarket’s “How much are you worth” page for more information and advice on calculating life insurance cover.

 

OCCUPATION/INDUSTRY HOW MUCH LIFE INSURANCE PEOPLE THOUGHT THEY MIGHT NEED ACTUAL COVER AMOUNT  DIFFERENCE Add in difference in percentages too
Property £35,000 £173,095 £138,095
Childcare £15,000 £112,315 £97,315
IT £101,852 £188,169 £86,317
Media £135,000 £215,000 £80,000
Education £56,304 £127,043 £70,738
Law £125,000 £180,992 £55,992
Unemployed £63,879 £113,299 £49,420
HR and Recruitment £97,500 £138,351 £40,851
Telecommunications £84,474 £124,333 £39,860
Insurance £113,333 £152,500 £39,167
Accountancy £112,143 £149,572 £37,430
Hospitality £53,571 £90,000 £36,429
Government £77,500 £111,638 £34,138
Cleaning £45,000 £77,241 £32,241
Sales £89,444 £120,276 £30,831
Retail £83,133 £109,356 £26,222
Business Management and Administration £81,000 £106,078 £25,078
Healthcare (excl. doctors, nurses) £117,105 £136,638 £19,533
Factory Work £67,500 £81,514 £14,014
Civil Service £139,000 £145,500 £6,500
Nursing £117,500 £111,862 -£5,638
Retired £62,500 £56,683 -£5,817
Science £125,000 £116,477 -£8,523
Customer Services £113,000 £103,555 -£9,445
Construction £129,333 £111,864 -£17,469
Banking and Finance £156,373 £125,902 -£30,471
Engineering £182,200 £146,510 -£35,690
Mechanics/maintenance £169,444 £94,611 -£74,833
Film, TV and Theatre £175,000 £80,156 -£94,844
Transport £191,667 £94,261 -£97,405
Art and Design £258,333 £141,452 -£116,882

 

 

 

Author: editorialassistant

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