July 14, 2009
30 Million Mortgage Loan Holders Without Protection
As effects of recession deepen, two thirds of homeowners still have not protected themselves for the long term should they lose their household's main income.
Scottish Widows asked thousands of homeowners about their protection arrangements and their findings paint a worrying picture of the UK – it shows that 30 million people could find themselves without a safety net if the household lost its main income due to critical illness, serious incapacity or death.
When asked how they would survive financially in this situation, 45% of Brits said they would use their savings if they or their partner were unable to work for 6 months or longer due to ill health and personal injury, critical illness or a serious accident and 42% said that on their death, their partner and family would have to fall back on savings to cope with the loss of an income.
However, the research showed that almost two thirds of people who plan to fall back on their savings in this situation only have between £500 and £1500 saved up – meaning that any reliance upon their savings would not last long.
Furthermore, the research shows that many people regard protecting themselves against the financial impact of illness as an extravagance as opposed to a necessity. More Brits think of their mobile as a necessity compared to income protection and if forced to cut back financially.
Richard Jones, protection market director at Scottish Widows, says: "No matter what the economic climate, illness, accident or death can occur at any time. Seeking financial advice and taking out protection to meet your needs can provide a financial cushion when you need it most. The lack of protection coupled with peoples tentative approach to saving in the current difficult economic climate could result in families and dependents taking radical steps to make ends meet if illness, accident or death affects the household income."
SOURCE: Scottish Widows, 09/07/09
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