Half of all mortgage holders in the UK have no life cover in place to protect themselves and their families financially should any unforeseen circumstances arise and they are unable to work as a result.
That’s the key finding to come out of Scottish Widows’ latest protection research, which also discovered that only a fifth (20%) of UK mortgage holders have a suitable critical illness policy.
The Scottish Widows’ research suggests that around 8.2 million UK adults are risking financial uncertainty and the potential loss of their homes should they find themselves unable to work at some point in the future.
One-third (33%) said they would be unable to live on a single income if they or their partners were unable to work for six months or longer due to poor health. Furthermore, more than two-fifths (43%) of those unable to live on a single income admitted that they would have to dip into their savings to make ends meet.
However, 43% said their savings would last for no more than a couple of months and 15% didn’t even know exactly how much money they had saved, suggesting that there are mortgage holders out there who could be relying on financial backup that doesn’t actually exist.
Just less than a quarter (23%) would only be able to afford household bills for a maximum of three months if they or their partner were unable to work. A further 23% could only make a maximum of three monthly mortgage payments, while 15% were not even sure how long they’d be able to cope with their mortgage obligations.
Of the mortgage holders who said that they’d be unable to survive on a single income if they or their partners were unable to work, a quarter (25%) said they would rely on state benefits to ensure they could manage financially.
One potential problem with this approach, however, is that changes to Support for Mortgage Interest mean that people no longer have to wait just 13 weeks before receiving this benefit. Instead, the waiting period now is 39 weeks, which may simply be too late for some mortgage holders who have no other protection in place.
Johnny Timpson, protection specialist at Scottish Widows, said: “None of us want to think about the worst, but our findings show that there are an alarming number of mortgage holders who are putting themselves at significant risk by failing to arrange cover for the unexpected.”
He added that recent cuts to welfare benefits are exacerbating the vulnerability of some mortgage holders.
Talking about the Scottish Widows’ research, Chris Gowland, Mortgage Director at Halifax, said that a mortgage is the “biggest financial commitment” that many people will make in their lives, which is why it’s concerning to see so few people making suitable plans to protect themselves and their families should they be in a position where they can no longer work.
“Having a financial plan in place will help protect your home in this type of eventuality and give greater peace of mind when it comes to what may be your greatest financial investment,” he said.
Protecting your income is such an important thing to do yet one which is often overlooked. Our Protection Specialists can give independent advice on what is the best policy for people’s individual needs and the advice costs nothing.
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