Moneynet warns over lack of life cover

Moneynet says a dramatic fall off in enquiry levels for life cover has led to fears that many thousands of home owners will be left exposed in the event of the death of the main breadwinner.

Levels of enquiries to Moneynets life cover service plummeted by nearly 50% in June and July of this year, down from nearly 8,000 during May to a little over 4,000 enquiries in each of June and July.

Enquiry levels recorded on Moneynets online financial data comparison service are a broadly accurate measure of the levels of life cover broker sales.

The Moneynet data also reflects worrying anecdotal evidence within the life industry that consumers are turning their backs on the product.

Sales of term assurance, which pays out on death, are normally steady throughout the year, typically with only modest volumes of seasonal fluctuation, the popularity reflects the low cost of this core insurance for homeowners with families.

Richard Brown, chief executive, Moneynet, says: This is not so much a tail off as a catastrophic slump, and you have to wonder how people are going to cover key outgoings such as the mortgage payment in the event of the worst happening.

Moneynet attributes the slump to a number of factors, including the World Cup which put the brakes on sales in other areas of the economy, the heatwave and rising council tax and energy bills.

But Richard Brown also warned that consumers are getting dangerously stretched, as mortgages account for ever higher percentages of the pay packet, and credit card and personal loan debt mounts.

Brown adds: It will not take much to tip the balance in an already over-stretched economy.

If the Bank of Englands Monetary Policy Committee decides to hike the base rate by 0.25% to head rising inflation off at the pass, then we could be looking at some very grim scenarios as consumers are obliged to tighten their belts even further.

Life cover is as cheap as chips and it is perhaps a false economy to abandon it and the upshot is that homeowners with young children could leave themselves very vulnerable by ignoring this basic cover.