A study carried out by Royal London revealed that 52% of those surveyed said they had no plan in place despite 25% of them knowing someone who had struggled to afford their mortgage because of illness.
Getting mortgage customers to take out policies to protect themselves against illness has been an ongoing struggle for advisers. To tackle the problem Royal London has joined the Seven Families campaign, a charity-led initiative, which aims to raise awareness of the financial impact of long-term illness and disability.
Royal London also found concerning evidence that many mortgage-holders who earn an income have not considered how long they could cope financially if they became too ill to earn. Half estimated it would be six months or less, and over a quarter did not know how long they could cope.
To make ends meet 59% said they would reduce their household expenses, 51% would use savings whilst 46% would rely on the earnings of someone else in the household and 34% would apply for state benefits.
Debbie Kennedy, head of protection proposition for Royal London’s intermediary division, said: “Seven Families shines a light on an important issue: how people would cope financially if they faced serious illness or disability, and became too ill to earn money to cover financial commitments like their mortgage.
“Our research highlights how many UK mortgage-holders are in a vulnerable position – unsure how they’d cope financially and who they would turn to for financial advice. We urge mortgage-holders who earn their income to consider how they would cope if they became too ill to earn.”