Around 6 million British homes at risk - mortgages potentially left unpaid, as individual’s cover remains inadequate.

Many Britons are leaving themselves vulnerable to the potential shortfalls of the so-called ‘life assurance protection gap’. This is where life insurance payouts fail to meet the costs that the policyholder originally intended to cover, or indeed where individuals are not protected at all.

In a YouGov review, commissioned by Friends Life, figures show that as little as 4% of people surveyed had income protection, 7% had critical illness cover and only 22.7% had life insurance. These low statistics are a stark representation of the gap, and more worryingly, leave a lot of people without adequate cover.

Calculations by Swiss Re put the total value of the protection gap at a whopping £2.4 trillion; equivalent to around £100,000 per person.

According to experts, those most at risk are as follows:

• Single parents
• Couples with young children
• Those aged less than 35 years old.

However, rather than placing emphasis on startlingly high, almost incomprehensible figures, insurers are keen to stress the implications of not having adequate protection in place.

Ron Wheatcroft, technical manager of Swiss Re, says “The focus needs to be about bringing individuals closer to insurance. These implications should speak a lot clearer than any theoretical protection gap. If it vital to understand the consumers’ perspective.”

For example, the 6 million UK homes that are currently at risk – due to homeowners’ lack of sufficient financial protection, according to research from Friends Life.

This particular study found that 57% of almost 4,000 surveyed homeowners, which currently have a mortgage, remain unprotected – meaning they would have to find an alternative way to meet monthly mortgage repayments if they were left unable to work.

Worryingly, results also flagged up an unhealthy reliance on wealth belonging to a spouse or partner. Almost 60% of those surveyed said that, if diagnosed with a critical illness and left unable to work, their main source of income would be their partner’s salary or savings.

But what if your partner had to scale down their work, and therefore their income, to take care of you?

There are also significant gaps when it comes to the average mortgage costs, and average life insurance payout. Figures from the Bank of England show that the average outstanding mortgage in the UK stands at £83,000, whereas stats from the Association of British Insurers reveal the average life insurance payout is just £51,000.

It is vital that consumers ensure that the amount paid out will sufficiently cover their family’s costs. Life insurance payout rates are currently the highest they have ever been, and are still rising; in 2013, 97% of protection claims were paid out, including 98% of term life insurance claims and 92% of critical illness claims.

Steve Payne, from Friends Life, said: “To find that 6 million homes are at risk because the owners have no financial safety net protecting them is almost unbelievable. Buying a house is the biggest investment most people will ever make and it’s hard to comprehend why people wouldn’t want to safeguard that.

“It has never been more important for people to be getting advice about protection insurance. Property prices are continuing to rise so a home as an investment is getting more valuable – another reason why protection it is so important.”

Addressing the protection gap is vital – overcoming this would mean that all families are financially safe, should the worst happen. Those who take the correct steps to safeguard their future will benefit most.

Working out your requirements for cover should always be done with a financial professional – policies vary greatly, and what may work for some, will not necessarily work for others. Contacting an advisor will ensure there are no shortfalls when it comes to your policy payout.

Essential Insurance offers no obligation advice and all advisors are fully trained in each area of protection insurance. Whatever your needs, we specialise in not only finding the most comprehensive, personalised policy for you, but also at the best price. For more information, contact one of the team today on 0800 612 8005.