Almost a quarter of homeowners have had financial problems due to illness, and millions could be at risk of finding it hard to pay their mortgage, according to new research. Here's why financial cover is so important.

Millions of homeowners could be just one illness or injury away from struggling to pay their mortgage, according to new research from protection and employee benefits provider MetLife UK.

A study found that 28% of mortgage holders have already experienced financial difficulties that caused them to miss a mortgage payment because they were unable to work due to illness or injury. For some, the problem was ongoing, with 7% reporting they had missed mortgage payments on multiple occasions.

Younger borrowers appear to be particularly vulnerable. About 50% of Gen Z mortgage holders said they had missed mortgage payments due to illness or injury.

Many homeowners are financially vulnerable

Any interruption to household income can quickly cause financial strain. While 71% of homeowners said they have savings available, those savings would last an average of just six months. One in five (20%) reported having no savings at all.

Research published by the Money & Pensions Service back in 2022 echoed the lack of savings among the UK population. It revealed that nine million people in the UK had no savings at all, and another five million had less than £100 saved – this amounted to a quarter of UK adults with less than £100 put away.

Why financial protection matters

More recent research published by Legal & General this year found that 34% of Brits said their emergency savings wouldn’t cover three months’ expenses.

When faced with a loss of income, many homeowners rely on family members or partners for financial support. Around 34% said they would turn to family, while 24% would rely on a partner. Only 17% said they would depend on insurance, while 15% would consider taking on additional debt through short-term borrowing.

The research also revealed that many people underestimate the importance of financial protection. Nearly one in 10 people said they regretted not arranging cover after experiencing illness or a loss of income. Others assumed they were already protected or only considered protection after a problem had occurred.

The findings highlight the importance of considering how mortgage payments and household bills would be covered if illness or injury prevented someone from working. Protection policies can provide valuable financial support during difficult times and help prevent homeowners from falling into financial hardship.

Three types of financial cover

Here's a quick summary of the three main types of financial cover:

• Income protection provides a regular monthly sum if you can’t work due to illness or injury.

• Critical illness provides a lump sum payment if you are diagnosed with a serious illness.

• Life cover pays out a lump sum if you pass away, so that your family can be financially secure.

There is a misconception that financial cover is only needed for older people. This is not the case, and we’re regularly hearing from younger clients who have recently become seriously ill.

If you’d like to learn how to ensure your home and loved ones are financially secure in the event of illness or a worst-case scenario, we’re here to help.