People are increasingly failing to take out life insurance when they purchase property, an industry expert has said.
Hard-up Britons who do not take out life insurance with their mortgages should reconsider their decisions, an analyst has suggested.
According to Simon Firmin, a life and pensions adviser for Plan Insure, the general belt-tightening which has occurred due to the credit crunch has resulted in more and more people neglecting to purchase the insurance cover along with property. According to the industry expert, this is a "risky strategy" for consumers to pursue.
In recent times, mortgage lenders hit by the financial crisis have been raising loans rates, tightening criteria for borrowers and even withdrawing products from the market entirely: meaning that many mortgage holders are facing increased repayments from before.
As well as impacting on life insurance take-up, this has also caused many to forego home purchases entirely: new figures from the Home Builders Federation show that overall mortgage approvals numbers in the UK have dropped 43 per cent from their peak two years ago, due in part to the credit crunch.
Mr Firmin commented: "The credit crunch has certainly exacerbated this [life insurance] problem… It doesn't surprise me that, because of the difficulties people are facing, this problem has become more severe. But it is a risky strategy, for all sorts of reasons. Protection is vital."
He added: "Our experience is that there's never a better time to review your protection needs [than when taking out a mortgage] – and if you don't do it then, you'll probably never get around to doing it."
