Widespread misunderstanding of income protection is leaving UK homeowners exposed to financial risk with significant gaps in knowledge around mental health cover, eligibility and claims, latest research suggests.
Data from LifeSearch and HomeOwners Alliance found that only a minority of homeowners fully understand what income protection policies actually cover, raising concerns for brokers advising clients on resilience and affordability.
One of the most striking findings centres on mental health. More than a quarter (26%) of homeowners believe income protection does not cover conditions such as anxiety or depression, rising to 34% among those who already hold a policy. Among under-35s, this increases further to 37%.
This disconnect comes despite mental health being a leading cause of workplace absence and a major driver of claims, highlighting a clear mismatch between perception and reality.
ELIGIBILITY MISCONCEPTIONS
Around one in six (16%) homeowners believe the self-employed cannot access income protection, rising to 31% among younger borrowers. A further 38% say they are unsure. With over 4.3 million people now self-employed in the UK, the findings point to a significant protection gap in a key borrower segment.
The research also suggests many households underestimate their reliance on dual incomes. Nearly one in five (18%) homeowners believe only the main earner requires income protection, despite the growing prevalence of joint mortgage applications and shared financial commitments.
CLAIMS TRIGGERS
Understanding of claims triggers also remains limited. More than a third (36%) of respondents believe policies only pay out for severe or permanent conditions, while 22% think claims can only be made once. In reality, most policies cover a wide range of illnesses and allow multiple claims, depending on the terms.
Debbie Kennedy, CEO of LifeSearch, said: “Income protection can provide a valuable safety net to so many people, yet this research shows there’s still a real gap between how people think it works and what it actually provides.
“These misconceptions reflect an industry that has historically done a better job of selling protection than explaining it. If we want customers to value their cover, renew it, and tell others about it, then clearer communication, better ongoing engagement and stronger product understanding need to become the norm – not the exception.”
VITAL SUPPORT
Paula Higgins, CEO of Homeowners Alliance, added: “These findings reveal a clear gap between perception and reality when it comes to income protection.
“Many homeowners wrongly believe it won’t cover mental health, isn’t available to the self-employed, or only pays out for serious conditions – leaving them more financially exposed than they realise.
“At a time when more people are self-employed and households depend on two incomes, these misconceptions matter.
“Income protection can provide vital support if illness or injury stops you working, yet too many people either misunderstand it or overlook it entirely.
“There’s a real need to improve awareness so people understand what cover is available before it’s too late.”
