Too many mortgage holders are unaware of the financial risks they face if they are unable to work, the Association of British Insurers (ABI) has warned, on the second anniversary of mortgage payment protection policy (MPPI) minimum standards.

The ABI and the Council of Mortgage Lenders (CML) developed the minimum standards as part of the government-backed Sustainable Home Ownership project.

From July 2000, the standards will apply to all MPPI policies, including those in force before the standards were launched.

But too many homeowners did not

consider how they would cover mortgage bills if they could not work through accident, sickness or unemployment, the ABI has said.

Consumer research by NOP has shown that one in five believed the government would provide them with financial assistance.

One third of those without payment protection thought they could rely on savings and investments to pay regular bills.

However, the ABI said it was unrealistic to rely on the government for payment, since state benefits to support mortgage repayments were means tested and, if eligible, could take up to nine months to come through.

Relying on savings was also risky, the ABI said, considering the low level of savings in the UK, which is on average £750 per household.