Nearly 60% of people would rely on savings to cover mortgage repayments if they couldn’t work despite most having £10,000 or less, according to research from life and pensions provider Friends Life.
London has the lowest take up of protection insurance with more than 775,000 homes at risk but overall some six million homes in the UK could be at risk.
The firm says that it highlights the financial tightrope many people are walking when it comes to their largest investment.
‘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,’ said Steve Payne, managing director of UK Protection at Friends Life.
‘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,’ he added.
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 pay out from their insurer could be used to cover the cost of their mortgage.
Life insurance continues to be the most popular form of protection. However, only 38% of mortgage payers hold a policy, and take up falls even further for critical illness cover at 14% and income protection at 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 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.
‘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,’ said Payne.
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.
