Life Insurance Shortfalls, How to Avoid Them and Protect Your Family

Life Insurance Shortfalls

Even if you have a Life Insurance Policy in force, are you sure you have enough to keep your family protected should the worst happen? According to a 2014 Scottish Widows report only around 50% of UK adults with a mortgage have life cover. That’s over 7 million adults without sufficient cover in place. 19% of those asked admitted they would not know how to cover their household bills should anything happen to them or their partner.

While many think that life insurance is only needed to cover a mortgage, there are other situations that can result in families being put at risk. Some examples are shown below and protecting them can make the difference between comfort and hardship for those left behind.

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Over 50% of universities now charge the maximum £9000 a year fees. Trying to ensure that your children have the best start in life is often very important. The average debt per student at the end of 2013/14 was £12,651. A term assurance policy can be designed to run until your child leaves university. As a result you will protect them in the event of your death and avoid substantial debt.


Often a business loan can only be drawn down if life cover is already in place. However, if you do have your own business, covering any business debt can avoid hardship to the family in the event of death.  Even without loans, does the family left behind know how to run the business prior to any sale? In the event of the business owner’s death, how would the family receive monies? If a business is jointly owned a policy can avoid many issues. For example, Shareholder Protection can ensure the deceased’s family receives proper value for the shares left in that company. If a business is owned in partnership, Partnership Protection can ensure the deceased’s family receives proper value for the share of the partnership that they are left.


Mortgages are probably the major reason for getting a Life Policy in the UK. Ensuring that your family home is owned outright is often a priority. However, there are many other sources of debt that could create hardship for your family in your absence.

As of June 2016, the average household in the UK had substantial consumer debt. Whilst this may not seem a huge burden, life assurance to cover this can avoid hardship on death of income winner(s).

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Inheritance tax and increasing funeral costs can add to your family’s burden. Although the terminology seems unduly complicated, calculating potential inheritance tax is actually quite simple.  Once that calculation is done, a simple life cover policy can be put in place to pay the tax bill when it falls due. That policy can be arranged to increase or decrease each year to reflect appreciation of your assets, or gifts being made and tax covered during the run off period.


Inheritance Tax Planning advice is not regulated by the Financial Conduct Authority

Life Cover (non-investment) and income protection-The plan will have no cash value at any time, and will cease at the end of the term. If premiums are not maintained, then cover will lapse.

Call Be Financially Secure for more details

To safeguard your family’s financial security call Be Financially Secure on 01273 495446 or click here.

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