Broker says clients still underestimate the cost of keeping a household running when illness or death removes an income
For many borrowers, protection remains framed as a single task: ensuring the mortgage is repaid if something goes wrong. One brokers says that approach can leave households exposed to the wider costs of daily life, even after the loan has been cleared.
“In my experience, many clients initially view protection planning as simply ‘covering the mortgage’,” said Chetan Jethwa (pictured top), managing director at Vistaara Financial Solutions. “Once the loan is repaid, they often assume the financial risk disappears.”
Jethwa believes the assumption often rests on misplaced confidence that support will be sufficient from elsewhere, whether the state, family, or an employer. The shortfall tends to become more obvious when advisers move away from broad estimates and scrutinise actual spending with clients.
“It is only when we review their bank statements together that the broader financial reality becomes clear,” Jethwa told Mortgage Introducer. “Beyond the mortgage, families typically have a wide range of ongoing commitments such as gym memberships, children’s swimming lessons, football training, piano lessons, streaming subscriptions, car finance, and other lifestyle expenses.”
He said essential costs compound the problem, with council tax, utilities, insurance and food forming a base level of spending that does not fall away when the mortgage ends. Even as inflation eases, he argued that many households are still managing budgets shaped by several years of higher prices.
“For many households, the weekly grocery bill is still nearly double what it was four years ago,” Jethwa pointed out. “Removing the mortgage payment alone does not eliminate the financial pressure on a family.”
That gap between “mortgage covered” and “household secure” can become acute when a family has life cover in place but no meaningful provision for income interruption, serious illness, or the longer-term costs of living. Jethwa recalled an early career case that has influenced his advice ever since: a couple who accepted mortgage life cover but rejected broader protection as unaffordable.
“Approximately six months later, the client’s wife returned to the estate agency where I was working to place the property on the market,” he recalled. “Following a serious change in circumstances, despite the mortgage life cover being in place, the family found themselves under considerable financial strain.”
Jethwa said the episode underlined a simple point for advisers: paying off the mortgage is not the same as protecting the household. “Paying off the mortgage is only one part of financial resilience,” he stressed. “A more comprehensive protection strategy, including income protection or critical illness cover, could have provided ongoing financial support, preserved stability, and potentially removed the need to sell the family home during an already emotionally challenging time.”
The structure of protection, he said, matters as much as the headline sum insured. Clients often default to lump sums because they are easy to compare against a mortgage balance, but the underlying risk is frequently the loss of ongoing earnings. Jethwa said the choice between a lump sum and a monthly benefit should be led by how a household manages money, and whether the surviving partner would want to take on investment decisions while grieving or under pressure.
“Not every client feels confident managing a large amount of money,” he pointed out. “For some households, a structured monthly income benefit is more suitable because it mirrors the purpose of the cover in the first place, which is to replace lost income.”
He said that conversation must start with practical questions about what would still need paying if one income stopped, including childcare, council tax and utilities, and whether the family would want to maintain routines for children.
“One of the most common misconceptions I encounter during the mortgage process is the belief that life cover or critical illness cover ‘does not pay out’,” Jethwa said. “There remains a level of scepticism, often based on outdated perceptions or isolated stories, rather than the reality of modern underwriting and claims processes.”
In his view, brokers and lenders can help by reframing protection as part of long-term resilience, not a compliance add-on to satisfy a lender.
“Instead of asking, ‘How do we repay the loan if something happens?’, the question should be, ‘How does this family continue to function financially if income stops?’” Jethwa said. “Ultimately, protection should be viewed not as a cost attached to a mortgage, but as a cornerstone of responsible financial planning.”
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