Six million homes could be at risk because their owners have no form of protection insurance, according to a report released this week.
Half of all mortgaged residential property in the UK is not covered by protection insurance, highlighting the precarious financial position many people may be in with their biggest investment, according to insurance provider Friends Life.
According to a recent survey, nearly 60% of people said their main source of income should they be diagnosed with cancer and have to give up work would be their partner’s income or savings. However, almost half of mortgage borrowers admitted they have less than £10,000 in savings and investments, far less than needed to pay the average household mortgage debt. This also coincided with research by leading cancer charities that one in three people will be diagnosed with cancer during their lifetime.
The report found that 57% of mortgage payers have no form of protection insurance, meaning that they could struggle to pay the mortgage should they be unable to work. Of the three main types of protection insurance, life insurance continues to be the most popular, but only 38% of mortgage borrowers hold a policy. 14% have critical illness cover, and just 7% have taken out income protection insurance.
The number of people with protection insurance varies by region nationally, with Londoners the least insured group of mortgage borrowers despite property prices being by far the highest in the country. Just 34% had any form of protection insurance, meaning that more than 775,000 London homes are unprotected. By contrast, 62% of Northern Ireland mortgage borrowers had some form of protection insurance - the highest in the UK.
Steve Payne, Managing Director of UK Protection at Friends Life commented:
“To find that six million homes are at risk because the owners have no financial safety net protecting them is almost unbelievable. Buying a house is the biggest investment most people will ever make and it’s hard to comprehend why people wouldn't want to safeguard that.
“It has never been more important for people to be getting advice about protection insurance. Property prices are continuing to rise so a home as an investment is getting more valuable – another reason why protecting it is so important.”