Royal London’s Tackling the gender pension and wealth gap report found that eight out of 10 homeowners with a mortgage did not have income protection and two thirds have no critical illness cover. This means they could be unable to pay their mortgage if they find themselves unable to work due to long-term sickness or disability.
However, homeowners are three times more likely to have life insurance, with 63 per cent of the report’s respondents having a policy in place.
Royal London said while it was good that many homeowners’ mortgages would be protected if they died sooner than expected, it was “worrying” that a larger proportion would be unable to replace their income and keep up with payments if this was lost due to illness or disability.
The firm said the issue was prevalent among renters too, as just 29 per cent have life insurance and only six per cent have income protection.
Left ‘financially exposed’
Jennifer Gilchrist, protection expert at Royal London, said: “With so many people in the UK already struggling to make ends meet, the thought of a family member losing their salary during a cost of living crisis is unimaginable.
“Wanting to protect yourself and your loved ones financially should hard times hit is natural, yet many families are leaving themselves financially exposed. It’s 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.”
She added: “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’s 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’s 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.”
