Consumers needlessly buying life insurance

Consumers could be squandering hundreds of pounds a year on insurance that they do not need, according to a new survey, overall this could lead to billions being wasted each year.

The survey by the Consumers' Association found that more than half of mortgage advisers recommend life insurance to homebuyers who do not need it.

It approached 39 advisers and 23 recommended life cover to a homebuyer with no children or dependants who also received cover from his employer.

The Association found that many firms will pay a death-in-service benefit of about four times salary to dependants, which will cut the amount of extra life cover you need.

A number of discount brokers rebate some or all of their commission because they do not offer advice.

The survey also found that critical illness is problematic. Whilst the insurance pays out a lump sum if you are diagnosed with one of a list of serious illnesses, such as cancer or heart disease, it can be difficult to lodge a successful claim.

Experts say that income-protection insurance may be more useful, as it pays a portion of your income, typically about half, if you are unable to work due to an illness or accident.