Incorrect assumptions about income protection are most acute among those who have taken out the cover, the survey from LifeSearch and HomeOwners Alliance finds.
Some 61% of homeowners who have a policy wrongly assume that losing their job will trigger a payout – when, in fact, it is illness or injury.
Meanwhile, 22% of those with a mortgage believe that they do not need income protection to cover their household finances and daily living expenses should they become too ill to work, because they think state benefits would sustain them.
Just over 20% of homeowners believe that having employer sick pay removes the need for income protection, rising to 34% of under-35s.
Statutory sick pay (SSP) – the primary state support available to employees who cannot work due to illness – currently stands at around £500 per month. For the self-employed, there is no entitlement to SSP at all. According to analysis by Rightmove, the average mortgage payment is £1,592.
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Furthermore, some 16% of homeowners incorrectly believe that holding an income protection policy would prevent them from also claiming SSP through their employer – a figure that rises to 28% among those who currently own an income protection policy.
No safety net
Debbie Kennedy, chief executive of protection specialist LifeSearch, said: “Too many homeowners think they’ve got a safety net in place, when in reality, they’re relying on assumptions that don’t hold up – whether that’s expecting support if they lose their job, or overestimating what sick pay will cover.
“What we see every day is that the gaps aren’t complicated – they’re about clarity. A good adviser helps people understand how everything fits together, from state support to workplace benefits and what happens if those change or disappear when they move jobs. No one should be finding out how limited that support really is at the point they need it.”
