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Life insurance needed to cover debt

Date: Mon, 08 May 2006

Many people could benefit from taking out a life insurance policy to cover their increasing debt levels.

New figures from accountancy firm KPMG show that 23,351 people were forced to declare themselves insolvent during the first financial quarter of the year – a rise of 73 per cent compared with the same period last year.

The increased number was due to a 51 per cent increase in the number of bankruptcies and a 142 per cent increase in the number of people entering individual voluntary arrangements with creditors.

"This increase highlights the fact that many people have borrowed to their limits," said Howard Archer, chief UK economist at the Global Insight consultancy.

"With unemployment rising and debt levels at record high levels, there is a very real danger that individual insolvencies and mortgage repossessions will climb markedly further over the coming months."

It is estimated that total consumer debt is increasing by 7.5 per cent per year and now stands at over £1 trillion. Therefore, many people should consider purchasing a life insurance policy that would provide loved ones with financial security if the worst was to happen.


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