52% of UK mortgage holders (equating to 5.2m people) who earn an income don’t have a plan in place to cover repayments if they fall too ill to earn for three months or more.
This is despite the fact that 25% of them (2.5m people) know someone who has struggled to afford their mortgage due to illness.
These findings from Royal London come as the mutual joins Seven Families – a charity-led initiative which aims to raise awareness of the financial impact of long term illness and disability. YouGov surveyed 2,208 UK adults for Royal London, and found that although 34% of those without a plan in place to cover repayments have thought about it, 18% admitted they have not given it any thought.
Royal London also found concerning evidence that many mortgage-holders who earn an income, haven’t considered how long they could cope financially if they became too ill to earn: 50% estimated it would be six months or less, and 26% don’t know how long they could cope.
When asked how their household would cope if they became too ill to earn: 59% of UK mortgage holders would reduce their household expenses; 51% would use savings; 46% would rely on the earnings of someone else in the household; and 34% would apply for state benefits.
When asked who they would turn to for financial advice if they became too ill to earn: 36% would consult friends and family, but 21% said they would not seek any advice. 56% would turn to a non-profit/charity or government body, and 15% would consult a financial adviser, but 11% admitted they wouldn’t know where to turn.
“Seven Families shines a light on an important issue: how people would cope financially if they faced serious illness or disability, and became too ill to earn money to cover financial commitments like their mortgage,” said Debbie Kennedy, head of protection proposition for Royal London’s intermediary division.
“Our research highlights how many UK mortgage-holders are in a vulnerable position – unsure how they’d cope financially and who they would turn to for financial advice. We urge mortgage-holders who earn their income to consider how they would cope if they became too ill to earn.”
Peter Le Beau, Income Protection Task Force chairman and spokesperson for Seven Families, added: “It is excellent news that the number of supporting companies for Seven Families continues to grow. Having Royal London on board is incredibly important and will allow us to further improve the services we will be providing to the families.”
