Shift in UK family patterns throws up cover challenges

Marriage is falling out of favour again but that doesn’t mean a fall in the need for reliable mortgage protection

KARL SHAW, BUSINESS DEVELOPMENT DIRECTOR, LEGAL & GENERAL NETWORK
KARL SHAW, BUSINESS DEVELOPMENT DIRECTOR, LEGAL & GENERAL NETWORK

Whatever your views are on marriage, statistics show it’s becoming less popular.

In 2008 the number of marriages and civil partnerships as a percentage of the population over 16 was the lowest since they were first calculated in 1862.

In the past 10 years this trend has again become a significant one.

There has been much press coverage recently about the rights of common-law partners.

While opinion is divided on whether marriage is a good or a bad thing, it is true that attitudes are generally more relaxed today towards couples living together and starting families outside marriage.

Against the background of fewer couples actually getting married, the average age of an individual getting divorced has increased.
In England and Wales the average age for a male getting divorced is now 44 and for a female 41.5.

Of those getting divorced, one in five will have had a previous marriage that also ended in divorce. This figure has doubled since 1980.

The consequence of all of this is that there are more unmarried couples buying properties together and starting families.

There are also more complex family structures emerging as people with children from previous relationships bring them into new partnerships.

As well as finding clients a mortgage, a good adviser will ensure their insurance policies are right for them

In isolation these are just a collection of interesting statistics showing how society is changing until you add in another factor. It is estimated that only 30% of the population has actually written a will.

It’s also worrying to think the protection gap in the UK is estimated at a huge £2.4trillion, with 54% of adults not having any life insurance.

It is even more worrying to think that, of the 46% of adults who do have cover, there is a proportion who have mortgage protection in place but will discover this doesn’t deliver the outcome they intended when it is needed most.

This is potentially quite a complex area and there are a number of factors that should be taken into account to ensure the protection will deliver the outcome it was intended for, such as:

  • Which policy to choose: single life or joint life cover.
  • Whether the couple are married.
  • Whether they both have wills.
  • Whether they have any children from their current or previous relationships.

Even if the cover provided does end up going to the right person there can be a delay of months, even years, waiting for probate to be completed.

In the meantime the surviving partner could lose their home.

As well as finding clients the best mortgage for their circumstances, a good mortgage adviser will also help clients put in place mortgage protection designed for their specific circumstances.

This will ensure the cover delivers the planned outcome in the most effective way should one of the partners die, whether that be through the use of trusts or wills.

Without good advice from a mortgage broker the effects of mortgage protection not working in the way it was intended to can be devastating.