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Extreme examples of under-insurance

ended 05. August 2025

We're putting together a story for a national newspaper on extreme levels of under-insurance, specifically life insurance and CIC. What are the most extreme cases you've come across and how did you resolve it? Any examples, anonymised of course, send them across — along with your advice to people with children who may have no life insurance / critical illness cover or have huge mortgages with no insurance to cover it in the event of death or illness.

4 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
None of us knows when illness or death might strike, but we can prepare. Do a gap analysis. What would your family need if you were no longer around, and how does that compare to your current cover? If you're spending over £100 a month on TV packages but have no life cover or income protection, it's time to seriously rethink your priorities.
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Scott Gallacher
Director at Rowley Turton
In my experience, people fall into three camps when it comes to life and critical illness cover. First, the extreme “I’ll be dead, so why do I care?” group – a view I’ve sadly heard even from parents of young children. Second, the needs-based camp, who insure just enough, accepting their family may need to make sacrifices. And finally, the lifestyle approach – the one I take myself – where the goal is to protect the lifestyle you're working hard to provide.

I never want my family to have to downsize or give up things like our Leicester City season tickets (which have given us many highs – and lows!) if the worst happened.

For wealthier clients, I often say insurance doesn’t really cost them anything. Unless they plan to die penniless, the premiums just reduce the kids’ eventual inheritance slightly – while massively improving their financial protection should something happen prematurely.
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Samuel Mather-Holgate
Managing Director & IFA at Mather and Murray Financial
For the price of basic life insurance, if you’ve got children and no cover this is nothing other than irresponsible. Life cover is cheap in most cases, and provides financial certainty for family members if you die. The levels of selfishness you see working in this industry never failed to amaze. Although some clients just need education, we have seen parents with children that would be destitute if one of those salaries ended, and for the cost of no more than a gym membership they decided it’s not worth it. Prioritising what cover is most important can be challenging, but setting and budget and working with your adviser will help.
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Molly Pile
Chartered Financial Planner at Fernbank Wealth
Most people do not know they are underinsured and they rely heavily on workplace benefits, such as death in service policies. Often, by the time people realise they are underinsured, it is too late to do anything about it.

Speaking to a professional (and not just google) about your protection needs has never been more important. We live in a world of borrowed wealth, with many people borrowing the maximum they can get their hands on for their homes, without taking the right precautions if something were to happen to them.

Having the right cover is important for everyone, but if you have a mortgage and young children at home then it is tremendously important for you. The great thing about life and illness insurance is if you take it out early (before age and health declines) then it is fantastic value. A wonderful and often overlooked life policy is Family Income Benefit, which provides an income to the surviving family after losing the household income.