More than 35 million UK people lack financial safety net
More than 35 million people in the UK have no form of financial protection in the event of unemployment or economic downturn, with nearly half (45%) being forced to rely on their savings if the main earner was unable to work for six months or more.
A study by Aegon into the proliferation of financial protection in the UK has found that nearly three-quarters of people are leaving themselves exposed to serious financial risk in the absence of any form of income protection or critical illness cover (CIC), with one in ten in a positon where they would be completely unable to cope should they find themselves unemployed.
Lack of awareness
Amongst this group, cost was cited as the largest barrier to buying protection, with a fifth of people pointing out expense as the main reason for their lack of cover. Given the scalability of price across the protection market, however, lack of awareness can also be attributed as another key factor; many appear unaware of the range of products available to them, and their relative affordability.
A fifth pointed out that they lack dependants who would benefit from a critical illness pay-out, once again suggesting there is a lack of awareness with regards to various benefits and services protection policies offer.
With the Money Charity estimating that 36% of UK households have no savings whatsoever, such products may be more vital than consumers realise.
"[Protection is] an important safety net that can help people meet their monthly expenses, ranging from mortgage repayments to their supermarket shopping," said Simon Jacobs, head of underwriting and claims at Aegon."However, the reality is that far too many people in the UK are putting themselves and their families at unnecessary risk by not taking steps to financially protect themselves.
"It's also worrying to see so many people relying on their savings for financial protection. When it comes to saving, most people have a goal in mind, whether that's a foreign holiday, house extension, or setting a little extra aside to enjoy in retirement. Whatever the reason, it would be a shame to have to spend all your hard-saved money on just staying afloat. Especially when the cost of a protection policy can be built around what you can afford to pay. Between five and ten pounds a month is surely a price worth paying for increased peace of mind."