Almost half of mortgage holders do not have any financial protection in place and one in five were adamant nothing would make them consider protecting themselves, MetLife research has found.
For those who could be persuaded it would take something significant such as illness or an accident, which could affect their eligibility, to push them to consider getting covered.
This was despite significant numbers of people having faced four or more weeks off from work due to accident or illness and as a result either missing mortgage payments or requiring help to make them.
MetLife surveyed 2,042 people who either had already purchased or were in the process of purchasing a property with a mortgage.
Its results illustrated the potentially severe side effects of borrowers not protecting themselves.
A third of those questioned said they had taken four weeks or more off work with almost half of this cohort needing financial support to help pay their mortgage repayments as a result.
And a notable 26% of all people admitted having had an accident or illness which left them in financial difficulty and resulted in missing a mortgage payment.
Overall, 1,199 respondents still had an outstanding mortgage but only 54% said they had savings to pay their mortgage repayments if they were unable to work due to an accident or illness.
Almost half (47%) of mortgage holders did not have any protection policies in place and of this cohort, the majority said they had never considered protecting their mortgage.
Perhaps most concerningly, one in five (22%) of those who had not paid off their mortgage said nothing would make them consider buying a protection product.
And the top reasons to push someone to consider getting protection – suffering an illness (30%), a change of job (25%) and an accident (24%) – potentially meant they would miss out on recouping their losses and securing future protection.
The main reasons for not taking out cover were the customer not thinking they would need it (28%), it being too expensive (24%) and believing they could not afford it (22%).
Worryingly one in ten said they did not think insurers would pay out, but there were encourage signs for the advice community as only 12% of borrowers said they had not been offered protection.
For the majority of mortgage holders who had taken out protection, peace of mind and being prepared for the worst were the main reasons at 45% each.
But there was more good news for advisers as 35% and 27% respectively said it was recommended by the mortgage broker/adviser or bank, or that it was offered alongside their mortgage.
Commenting on the findings, Rich Horner, head of individual protection at MetLife, said that despite a challenging economic outlook, 2020 saw many people turn their dream of homeownership into a reality.
“The stamp duty holiday extension announced in the budget, coupled with the “government guarantee” on mortgages, means the number of homeowners is set to rise even higher. But, as ‘Generation Rent’ becomes ‘Generation Buy’, there is an increased need for financial protection and advisers have an invaluable role to play in providing impartial advice and identifying protection gaps.
Horner added while most of us don’t want to think about falling ill or having an accident, the reality is it can happen to anyone.
“Some may think they’ll never need it, but ultimately not having something in place – be it a protection policy or savings – to fall back on, can add to what is already a stressful time should you fall ill or have an accident leaving you unable to work. And at a time when individuals need to recuperate, this worry, and stress could add to the healing time.
“Our research found that more than half of homeowners, and those buying a home, claimed to have mortgage protection in place, a much higher figure than the industry average. This raises an interesting question around what constitutes mortgage protection and suggests more needs to be done to enhance understanding and awareness of what financial protection is available, and what is best suited to meet their needs. And as providers, we have all have a role to play in that.”