According to new research from Sainsbury's Finance, four in 10 mortgage-holders are without life insurance.
This means if they die unexpectedly, the outstanding mortgage will not be paid off and utility, insurance and all other bills will still have to be met by those left behind.
The average outstanding mortgage balance for those without life insurance is £36,000, according to the research. What's more, a high proportion of those without life insurance are in age groups where they are most likely to have dependants.
For example, one in three 35- to 44-year olds and nearly a third of 45 to 54-year-olds, are without cover for mortgage payments. The effect of this is that already vulnerable families could be left with no other option but to sell their home.
Here, we take a how life insurance works and what you need to watch out for when buying cover.
How does life insurance work?
The purpose of life insurance, which is sometimes known as life or term assurance, is to pay out a lump sum should you die unexpectedly.
The most basic kind of cover applies to a given timeframe - typically 25 years. More complex 'whole of life' policies are available but these are linked to investments, such as endowments.
Many people assume life insurance is only appropriate for the breadwinner of a household and/or those with dependants. After all, if your salary were to suddenly stop, where would the rest of your household get the money to pay the mortgage, bills or even put food on the table?
However, if one person currently stays at home to look after the children, you also need to think about insurance for them too, as if they were no longer around, the remaining partner would have to fund childcare costs.
You can choose how much you want your policy to pay out, which is known as the 'sum assured'. How much this is will hinge on a number of factors such as the size of your outstanding mortgage, what your partner earns, and the age of your children.
The level of the sum assured, combined with your personal circumstances, such as your age, gender and health (in other words, the probability of you dying) are all taken into account by the insurer when it calculates your monthly premium.
Once this premium is agreed, it will not change. If you do not die during the policy term, you will stop paying the monthly premiums, cover will cease and you will be back to square one.
Different kinds of policy
When buying term life insurance, you will need to choose from two main types. The first is decreasing term, which will pay out a sum that is relative to your outstanding mortgage.
In other words, as your debt to the mortgage lender decreases, so does the amount paid out by the insurer on your death.
This means that decreasing term life insurance is the cheapest option, but it's only suitable if you have a repayment mortgage (not interest-only) which will get smaller as the years go by.
A more expensive version, called level term life insurance is also available. This pays out a fixed sum (the sum assured) for the whole duration of the policy, regardless of how your financial situation changes.
Family Income Benefit
You should also look at how you want to be paid under your life insurance policy. In many cases, a lump sum may not be the best option - after all, that's not how your salary was ever paid.
Families especially might want sustain a regular income after the death of the bread winner, in which case a Family Income Benefit policy could be the best option.
This will provide a monthly tax-free income which will be paid until the end of the agreed term. You can even opt to have the payment increase over the term to mimic would-be pay rises.
Do I really need life insurance?
Not everyone needs life insurance. For example, if you are single with no dependents it doesn't really matter what happens your mortgaged home.
Even the most conscientious among us can rest assured that the bank or building society will simply take it back.In this case, you may be better off paying for a different insurance, such as Income Protection.
This will pay out if you are unable to work due to accident, sickness or unemployment until such a time as you are fit enough to return to work, or the policy ends.
Matt Morris at independent financial adviser, Lifesearch, said: "For most people of working age, Income Protection is the most important insurance policy you can buy to protect your finances.
It is a back-up policy to ensure you can maintain your lifestyle and pay the bills. Some of the long term polices will even pay out until retirement age."
Before you rush into buying life insurance, it's also worth finding out if you have any existing benefits with your employer, such as Death in Service. Always check the terms and conditions, but there is little point paying twice for the same cover.
Please note: Any rates or deals mentioned in this article were available at the time of writing.
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