UK homeowners are under-prepared to meet their housing costs if they are unable to work due to illness or disability, according to a new Report from Royal London.
The findings are part of Royal London’s ‘Tackling the gender pension and wealth gap’ report.
The research shows that eight in 10 homeowners paying a monthly mortgage do not have income protection in place and two thirds have no protection in the event they are diagnosed with a critical illness. In contrast, 63% have life cover to safeguard the family home if they die sooner than expected.
This is despite men being around six times, and women 12 times more likely to be ill and unable to work than they are to die.
Royal London said tenants are in an even more precarious situation. Just a third (29%) of renters have life cover and only 6% have income protection.
Jennifer Gilchrist, protection expert at Royal London, said rising property prices and an increasing number of people choosing to cohabit rather than marry has led to conversations about protection falling by the wayside.
“Wanting to protect yourself and your loved ones financially should hard times hit is natural, yet many families are leaving themselves financially exposed. It is important that awareness is raised about the positive impact of having insurance in place and the difference it can make to improve people’s financial resilience,” said Gilchrist.
“While it’s encouraging that life insurance is in place for many homeowners, statistically it’s far more likely that during someone’s working life they will be off work due to illness or injury, rather than die. It is vital that people understand the importance of having cover beyond just life insurance.
“Even though lenders no longer insist on taking out life insurance to get a mortgage, buying a home is still a significant trigger for people to buy protection insurance. It is a simple way to ensure the family home is protected if the main breadwinner dies, but we need to look beyond just the risk of premature death,” she added.
