17th September 2015
New analysis shows that the vital task of updating a life insurance policy slips the mind of most people who are moving home.
While moving can be hugely stressful, it is perhaps not surprising. But the survey from AA Life Insurance found that amongst 2,000 recent home-movers just 63% had a life insurance policy and only a third, at 22% overall, updated an existing policy since moving home. Some 14% took out life insurance for the first time.
Unsurprisingly, those who had updated their policy said it was most likely because they had moved to a bigger property. It was most common for a policyholder to increase their cover by £50,000-£100,000 which 21% did. Some 18% upped their cover by £30,000-£40,000. Only 7% said they decreased their cover.
It is recommended that those with life insurance check their policy after they move to make sure it is still sufficient. For example, with a larger mortgage, it’s likely that an existing policy will not properly cover a family if something happened to the policyholder.
The most common reasons cited by people for not updating a life insurance policy is because they just have not gotten round to it or do not think they need to update it.
Kathryn Thomas, director of AA Life Insurance said: “Checking a life insurance policy probably isn’t front of mind for those people that are in the busy process of moving home.
“If you have a policy to cover your mortgage it’s important not to completely forget about it. Your previous and new home may be quite different in value and there could be a considerable gap between the amount you’re covered for and the amount you would need, meaning there could be quite a shortfall if the life insurance doesn’t cover the remainder of the mortgage.”