Life insurance isn’t an exciting topic, but many UK consumers don’t realise how crucial it is for home ownership, plus some with-profits policies can actually be a good way to save money long term. Here’s the word;
A new report has revealed millions of Brits don’t know what life insurance is, have never been educated about it, what you need it for, and if it’s a requirement for a mortgage.
The 2025 Life Insurance Index, commissioned by UK-lifeinsurance.com – the independent life insurance website created to help users find the best possible life insurance quotes for their circumstances, ascertains Britons’ knowledge about potentially the most financially impactful insurance product on the market.
Across 2000 UK adults, UK-Lifeinsurance.com explored the number of Brits with life insurance policies, their education on these types of products, misconceptions, and affordability.
The report shows millions of Brits don’t know what life insurance is, have never been educated about it, what you need it for, and if it’s a requirement for a mortgage. A quarter of Brits know they don’t have a life insurance policy, but up to 55% could lack coverage, potentially missing out of thousands in payouts for their family in the event of their deaths. Furthermore, over a third of Brits don’t know what their loved ones will receive from their life insurance and/or pension after they pass and 1 in 9 will be reliant on inheritance to fund retirement or homeownership later in life.
Misconceptions with Life Insurance and Mortgages
As many lenders require life insurance as part of their terms and conditions for lending for a mortgage, many believe it’s a requirement, when in fact it isn’t law. Nearly a third of Brits think you need a life insurance policy in place to be accepted for a mortgage with that percentage rising to 40% for millennials. Regionally, this misconception is most accepted as fact in Northern Ireland, with 44% of respondents there believing it to be law.
Don’t know what life insurance is or been educated on it
Nearly a fifth of Brits (18%) don’t know or are unsure what life insurance is with only 67% of Brits saying they know what it is. A quarter of 18-24 years don’t know or are unsure what life insurance is. It is no surprise as less than half of Brits stating they’ve been educated about life insurance and nearly a quarter saying they’ve never learned about it. More women lack education, with three in ten women (29%) have never been educated about life insurance, versus 18% of men. Worryingly, a third of people in some towns and cities across the nation have never learned about life insurance, with Norwich (35%), Sheffield (34%), and Plymouth (33%) ranking the highest for no education in the UK.
Most don’t know what their loved ones will receive upon their death
Only 36% of respondents said they know what their life insurance and/or pension will pay out when they die, and 27% said they are unsure what will be paid out. Only 29% of women know what their loved ones will receive compared with 44% of men. 16% of people in Northern Ireland said they have no idea what their life insurance and/or pension would pay out if they died, the highest percentage nationally.
1 in 9 rely on Inheritance to fund major finances
11% of Brits said they are reliant on inheritance from family members to afford a house or fund retirement. This increased to 13% of 25-44 year olds and 12% of 45-54 year olds. Regionally, 13% of respondents in the East of England and the North East said this was true, the highest nationally, compared to just 6% in Wales and the West Midlands. Plymouth (16%) and Norwich (15%) were the cities that people would rely on inheritance the most.
A spokesperson at UK-lifeinsurance.com, commented on the report: “This report shows what many of us in the industry already believed; we don’t do a good enough job in educating people about life insurance, what it is, what it is used for, its benefits and its role in estate planning and retirement.”
“Life insurance can be very affordable for most people and can give families real peace of mind to protect their loved ones financially if the worst were to happen. Also, different products can provide personalised solutions to fit people’s goals and aims.”
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