"Too many homeowners think they’ve got a safety net in place, when in reality, they’re relying on assumptions that don’t hold up."
- Debbie Kennedy - LifeSearch
New research from LifeSearch and HomeOwners Alliance has revealed that false beliefs regarding the role of the state, employers, redundancy and income protection (IP) are leaving households exposed if they’re unable to work.
This includes what income protection is actually designed to cover, with almost half (47%) of homeowners wrongly believing that this type of cover would pay out if they were made redundant, when in reality, IP is designed for illness or injury.
The misconception is most acute among people who have already taken out a policy: 61% of homeowners who currently hold income protection believe it would pay out in the event of redundancy.
Furthermore, almost one in five (19%) homeowners believe IP is unnecessary because they think state support would be sufficient if they were unable to work due to illness or injury. This rises to 22% among those with a mortgage, and 42% among under-35s, suggesting that this misconception is most pronounced among those most financially exposed.
Statutory Sick Pay (SSP), the primary state support available to employees who cannot work due to illness, currently stands at around £500 a month, which falls far short of what’s needed to cover monthly repayments and essential bills for most mortgage holders. For the self-employed, there is no entitlement to SSP at all.
Furthermore, one in six (16%) homeowners incorrectly believe that holding an income protection policy would prevent them from also claiming SSP through their employer. This figure rises to 28% among those who currently own an IP policy.
In addition, more than one in five (21%) homeowners believe that if their employer provides occupational or enhanced sick pay, they do not need income protection, a view held by 34% of under-35s.
While enhanced sick pay and group income protection can provide short‑term support, it is at the employer’s discretion, limited in duration, and does not move with the employee when they change jobs, meaning many workers lose that safety net when they move roles.
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"Too many homeowners think they’ve got a safety net in place, when in reality, they’re relying on assumptions that don’t hold up - whether that’s expecting support if they lose their job, or overestimating what sick pay will cover," Debbie Kennedy, chief executive of LifeSearch, said.
"What we see every day is that the gaps aren’t complicated - they’re about clarity. A good adviser helps people understand how everything fits together, from state support to workplace benefits and what happens if those change or disappear when they move jobs. No one should be finding out how limited that support really is at the point they need it."
Paula Higgins, CEO of HomeOwners Alliance, added: "Homeowners work hard to buy their homes, but too many may be relying on assumptions about financial support that do not match reality. A mortgage is usually a household’s biggest monthly commitment, yet this research shows widespread confusion about what state support, employer sick pay and income protection actually cover.
"The most worrying finding is that nearly half of homeowners wrongly think income protection would pay out if they were made redundant. That misunderstanding could leave families badly exposed at the worst possible moment. Homeowners need clear, practical advice so they understand what protection they have, where the gaps are, and how they would keep paying the mortgage if illness or injury stopped them working."
