A staggering six million homes, half of all mortgaged residential property in the UK, could be at risk because the owners are not covered by any form of protection insurance according to research from life and pensions provider Friends Life. The warning highlights the financial tightrope many people are walking when it comes to their largest investment.
According to a recent survey by Friends Life, nearly 60 per cent of people said their main source of income if they were diagnosed with cancer and unable to work would be their partner's salary or savings. That is despite almost half of mortgage payers admitting they have £10,000 or less in savings and investments, far less than needed to provide for average household mortgage debt. This follows research by leading cancer charities that around 1 in 3 people will be diagnosed with cancer during their lifetime.
Steve Payne, Managing Director of UK Protection at Friends Life, said: “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.”
Home ownership can be protected by life insurance, critical illness cover or income protection. Then should the worst happen and a property owner dies or becomes ill and is unable to work, the payout from their insurer could be used to cover the cost of their mortgage. But the Friends Life research found more than half (57%) of all UK mortgage payers do not have any form of protection insurance which means they would have to find a way to cover their monthly mortgage repayments even if they were unable to work.
Life insurance continues to be the most popular form of protection. However, only two in five (38%) mortgage payers hold a policy, and take up falls even further for critical illness cover (14%) and income protection (7%).
Londoners are most at risk with those owning property in the capital least likely to have any kind of protection insurance, despite property prices being the highest in the UK. The survey showed that just a third (34%) have any form of protection insurance, lower than anywhere else in the country. It means owners of more than 775,000 homes in London are unprotected.
Steve Payne from Friends Life added: "With the average house price in London now over £450,000 property in the capital is a huge investment. That figure is likely to rise further, yet Londoners do least to protect their greatest asset.”
Residents in Northern Ireland, on the other hand, were more financially savvy with nearly double having some form of life insurance, critical illness cover or income protection.
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