The Double-Income Tightrope: What's Your Plan B for the Mortgage?

The Plan Your Spouse Thinks You Already Have

If your Mortgage Repayments rely on two incomes, what happens when one income is gone?

As a risk insurance specialist, I see all too often hard working Australian families, who seemingly have doing everything right - juggling two incomes, a home to call their own, yet they're walking a financial tightrope daily that they see as simply, the 'new normal' and feeling powerless to protect themselves from it's very real risks.

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The Most Dangerous Assumption Threatening Your Family Home

Many Australians remember the devastating lost of lives and homes in the 1983 Ash Wednesday Bushfires in Victoria where 47 people tragically died and over 2,100 homes were destroyed to bushfires. What we don't talk about is how every year, 23,000 Australians a year are disabled and more homes are lost to sickness and disability, than are lost to fire and flood combined.

They're juggling life from inside the throes of a pressure cooker environment we know as mortgage stress - where every dollar is allocated, and the unspoken hope is that nothing ever goes wrong. This is the financial discussion your family needs to have, but likely isn't. It’s a frank conversation for the double-income family navigating the treacherous waters of a hefty mortgage without a safety net.

But what if something does go wrong? What if one of those vital incomes suddenly vanishes due to illness, injury, or worse?

The Heavy Weight of 'What If'

For the dual-income couple with a hefty Sydney style mortgage, but no life or disability insurance to protect it, the stressors are a constant; and it can feel like a low-grade hum beneath the surface of daily life.

Every cough, every near-miss on the road, every headline about redundancies carries an unspoken weight. Driving home from work on one of our Motorways can feel anxiety creating, not just because of the unbalanced toll to speed ratio, but by watching other frustrated drivers pushing their luck (and the limits of mechanical physics) getting into yet another road rage or roadside accident.

The three primary family stressors we see

1. The Fragile Financial House of Cards: where your entire financial structure is built on the assumption of two continuous incomes. The loss of one could mean an immediate struggle to meet mortgage repayments .
2. The Burden of Sole Responsibility: where in the event of one partner's sickness or injury and incapacity to continue to earn their income, the other is left to carry the entire financial and emotional load. This means becoming the sole breadwinner and potentially a full-time caregiver , at the same time.
3. The Threat to Long-Term Goals: where dreams of house renovations (compulsory kitchen makeovers), holidays, or providing for your children's future at a selective school are suddenly at risk. The focus shifts from aspiration to mere survival.

The Champion's Burden: Who Starts the 'Tough Conversation'?

When it comes to the confronting topic of death and disability, who is responsible for championing this conversation and taking the lead?

• Often, there’s a silent, mutual avoidance. It’s a conversation loaded with emotion and a tangible sense of tempting fate. This silence leads to a dangerous assumption, a phenomenon I call 'The Plan Your Spouse Thinks You Already Have in Place'.
• It’s a shared fantasy that somewhere, somehow, a safety net just already exists. One partner might assume the other has it 'handled,' perhaps through their superannuation.

But the default cover in super is often dangerously low, typically insufficient to clear the average Australian mortgage, let alone provide for a family's ongoing living expenses.

Our clients tell us that this unspoken pact between a couple can feel like a fragile shield, and its shattering in a time of crisis is an emotional and financial bombshell going off.

Why Do We Avoid Hard Conversations? The Real Psychological Barriers

The decision to put off getting your Life and Disability Insurance in place often feels purely economic; but the real reasons for decision avoidance is usually more nuanced and deeply psychological.

It's not that you can't afford it; it's that you think this could never happen to you.

The real barrier isn't affordability; it's the deeply ingrained belief in our own invulnerability (and for some even the idea of talking about it might attract it- an odd thought but real for many people).

Here are the most common mental hurdles we see as financial advisors:

Chart: Common Physiological Biases everyone faces

This combination of psychological biases is a direct cause of Australia's severe underinsurance gap, with an estimated 95% of families lacking adequate protection.

So where can you go from here?

From Anxiety to Action: Building Your Plan B

The path out of mortgage stress and into greater financial security isn't about working harder; it's about working smarter and protecting what you've already built, while your wealth has the time to grow and mature.

4 Practical steps you can take today

1. Break the Mortgage Burden Silence: make a dedicated time with your partner for the 'what if' conversation. Put your phones aside and begin with this simple question: "If one of us couldn't work for six months, what would our financial situation look like?"
2. Conduct a Double Income Double Mortgage Reality Check: Log in to your superannuation accounts (most now have a smartphone app) and check the level of your default life and disability (TPD) insurance you hold. Is it enough to cover your $842,000 average mortgage and ongoing expenses? For most, it's a fraction of what's actually needed to pay out mortgages and clever at least two years of family income.
3. Understand the Financial Tools to Use: A financial safety net is built from a combination of financial tools designed to protect people against different events.

Chart: Types of Financial Tools that can protect Mortgage Debt & Family Incomes

4. Start to Use Professional Guidance: A Sapience Financial risk insurance specialist can help you navigate the complexities of life and business and create solutions that fit your budget and expectations. We’re the helpful but neutral third party to facilitate the conversation with your partner.

Pro Tip: One thing many folks don't know is that most personal insurance premiums can be paid automatically from a super fund once a year, so it's more a choice you make, rather than a monthly personal cost you have to bear.

The conversation about life and disability insurance isn't about focusing on the worst-case scenario; it's about empowering your family to face the future with confidence.

Don't let the unspoken gamble dictate your family's future. It's time to finally take action today and build your Plan B for your double income mortgage debt, just in case, and then get on with living a bigger, protected life.

Frequently Asked Questions: Mortgage Protection & Income Risks

Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses.  He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn.  Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.