Wednesday 9 September 2015
- One in three (35 per cent) have a form of life insurance as cover but millions are left exposed
- One in five (18 per cent) adults know someone whose standard of life was severely impacted due to not having protection insurance
Almost one third (32 per cent) of UK adults have experienced a serious financial shock in the past five years such as losing their job or being unable to work due to injury - but only a third (35 per cent) had the right insurance in place to cushion the financial blow according to new research from the Money Advice Service. With many families just one step away from serious financial struggles, the Money Advice Service and Association of British Insurers have come together to encourage the UK to build up a rainy-day savings fund or consider relevant insurance policies to safeguard themselves and their loved ones against financial trauma.
Mind the gap
No one likes to think that something bad will happen to them, but each year one million workers suddenly find themselves unable to work due to serious illness or injury*. Protection insurance is designed to cushion against the financial impact of unexpected and costly events such as serious illness, unemployment, accidents, and death.
Despite this, there is a gap between the number of people who experience unexpected events and those who have a contingency in place to safeguard their finances. Only a limited number of UK adults have a protection insurance safety net – such as income protection – with just one in five (17%) adults considering it a necessity – despite the same amount (18 per cent) knowing someone whose standard of life was severely impacted due to not having protection in place.
Top reasons for not taking income protection insurance include:
- Can’t afford it – 28%
- Not considered it – 17%
- I have no one dependent on me – 11%
- I would rather have the spare cash now – 10%
- I don’t think I’ll lose my job – 10%
‘Til death do us part
Eight per cent of people aren’t concerned about what happens to their family’s finances after they are gone. However, 67 per cent of adults confirmed they have people reliant on their income, with children (35 per cent), spouses (26 per cent) and parents (6 per cent) topping the list of dependents. Furthermore, 44 per cent agreed that protection insurance is important to protecting their family.
While insurance can be a sensible way to protect a household’s financial future, building up an emergency savings pot is another way to help guard against the unexpected – only one in four adults (39 per cent) are confident that they enough money saved to cover unexpected costs.
Need a wakeup call?
For more than a tenth of UK adults (12 per cent), an incident happening to a friend or family member would be a ‘wake up’ call when it comes to considering protection insurance – while 16 per cent say having children would make them take out protection insurance.
Responding to the findings, Andy Webb, money expert at the Money Advice Service, says: “The research highlighted that there is a big gap between the number of people who experience financial shocks, and those that protect their lifestyles by either saving for a rainy day or considering the relevant protection insurance.
“As the research suggested, many of us find it difficult to comprehend the thought of illness and death and as a consequence we may be tempted to put safeguarding our finances to the back of our minds. We never know what is just around the corner but it is important for consumers have all the information they need to plan ahead for how they would cope financially should the worst happen.
“Creating a rainy day fund is a good first step to safeguard both yourself and your family. We would also urge people to consider whether insurance might be an option within their planning and budgeting. There is a wealth of advice, tips and tools available on the Money Advice Service website to help make those decisions easier and help you plan for a secure financial future.”
What insurance policy is right for your needs
There are many different types of insurance products to consider depending on your personal circumstances. To find out what type of insurance you might need, visit the Money Advice Service’s guide to securing your financial future.
For more information and advice visit www.moneyadviceservice.org.uk.
NOTES TO EDITORS
Research conducted by Opinium for The Money Advice Service in June 2015 amongst 2,000 UK adults. 80% of the sample are in work.
- CESI research for the ABI: ‘Welfare Reform for the 21st Century’.
Money Advice service is working in partnership with the Association for British Insurers to highlight the importance of safeguarding finances
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For resource syndication:
Money Advice Service tools and resources are available free for syndication. For further information please contact 020 7943 0616 or email Jo at Joanna.Smith@moneyadviceservice.org.uk
About the Money Advice Service
The Money Advice Service is an independent organisation. It gives free, unbiased money advice online at moneyadviceservice.org.uk, over the phone on 0300 500 5000, and face-to-face right across the UK. The Service was set up by Government and is paid for by a statutory levy on the financial services industry, raised through the Financial Conduct Authority. Its statutory objectives are to enhance the understanding and knowledge of members of the public about financial matters (including the UK financial system); and to enhance the ability of members of the public to manage their own financial affairs.