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How to Survive Financially after the Death of a Loved One

Creating a Financial Safety Net

How to Survive Financially after the Death of a Loved One

Former Government Minister and financial campaigner, Ros Altmann, has often drawn attention to the plight of those over 55 looking for home loans, commenting that they are “facing age discrimination in the mortgage market, with companies refusing to lend purely on the grounds of their age, rather than their income”.

Since the introduction in April 2014 of tighter affordability criteria, part of the government’s Mortgage Market Review, many high-street banks and building societies adopted a cautious view when it came to lending to older borrowers. This was especially true where the mortgage loan would be repaid after the borrower’s retirement.

Why change is overdue

Rising house prices and the time it takes to amass a sizeable deposit have meant that house purchase decisions are made later in life. Many older couples are divorcing, remarrying and buying new properties. The changes to pension rules mean that more cash can be released earlier, and tax-free lump sums have been a contributory factor in the recent rise in buy-to-let property mortgages. 

The death of a spouse is considered by many to be one of life’s most stressful experiences, bringing with it many immediate and longer-term consequences that can be devastating. Losing your partner when you’re young creates additional practical and emotional problems, especially if you have children.

Death can be a tough subject to talk about. Anyone who has followed the Adam Golightly diaries in the Guardian will know how traumatic it can be to face life bringing up two small children following the tragic death of a wife at a young age.

He writes movingly about dealing with grief and the financial pressures of raising his family. He contemplates the cost of grocery shopping, mortgage, car and a whole new raft of childcare costs that with his wife’s death will now have to come from just one wage. The cost of a nanny, he realises, will require nearly half his gross salary.

He concludes one of his diary entries with the following plea to his readers to think seriously about life insurance: “I’m not a financial adviser but consider yourselves nagged – check and improve your family and personal protection cover now.”

Providing a financial safety net

Younger couples in particular need to think clearly about the financial realities they might face following the death of a loved one.

Sadly, a life insurance survey1 shows that this message is failing to get through to those who arguably need to hear it most. The findings show that nearly 60% of all adults have no life cover, with the worst culprits being 35-44 year olds, despite this age group being most likely to have young children and financial commitments.

A review with a mortgage and protection adviser will ensure you have the right cover in place for your financial circumstances.

1AA Life Insurance, 2014