Most parents worry about their adult children’s financial future, but few realise that their biggest financial risk might actually be their own children’s financial dependence—especially if those children have a mortgage.
In an ideal world, adult children would be financially independent. However, life doesn’t always go to plan. Job losses, illness, accidents, or even relationship breakdowns can quickly put them in a financial bind. And when that happens, who do they turn to for help? Mum and Dad.
The Reality of Mortgage Risk
With rising property prices, many young Australians take on large mortgages to enter the housing market. These mortgages rely on one critical factor: the borrower’s ability to earn an income. If your child is unable to work due to illness or injury, their mortgage repayments don’t stop—leading to potential financial disaster.
This is where parents often step in, using their own savings, superannuation, or even redrawing on their home loans to bail out their children. It’s a natural instinct, but it can seriously jeopardise a parent’s own financial security in retirement.
How Income Protection Can Reduce This Risk
Rather than relying on the “Bank of Mum and Dad” as a safety net, income protection insurance is a far smarter and more sustainable solution. Here’s why:
✅ Pays up to 70% of lost income – If your child is unable to work due to illness or injury, income protection can cover a significant portion of their salary, keeping them afloat.
✅ Covers mortgage repayments and living costs – Prevents financial stress, allowing them to maintain their lifestyle without relying on family support.
✅ Reduces financial strain on parents – Protects parents from having to step in and shoulder their child’s mortgage repayments.
✅ Long-term financial security – Helps adult children stay independent and protects intergenerational wealth.
Why It’s Critical for Mortgage Holders
Many people assume their superannuation or sick leave will be enough if they face a health crisis, but the reality is that super is locked away, and sick leave runs out fast. Income protection ensures ongoing financial stability, preventing mortgage default and unnecessary financial burden on parents.
The Bottom Line
The biggest financial risk to parents of adult children isn’t market downturns or interest rate hikes—it’s having to financially support their kids when things go wrong. The best way to mitigate this risk? Making sure your adult children have a solid financial plan, including income protection insurance.
If you have adult children with a mortgage, it’s time to have the conversation—before financial stress becomes your burden. We are currently helping source affordable protection for our clients children.
Want to ensure your family is protected? Speak to your SWU Group financial adviser today: financialsuccess@simonwu.com.au