Just a third of Britons have life insurance leaving millions exposed to potential financial shocks

10th September 2015


Almost a third of UK adults have experienced a serious financial shock in the past five years such as losing their job but only 35% had the right insurance in place to cushion the blow according to new research.

The Money Advice Service, who conducted the analysis, alongside the Association of British Insurers (ABI) are urging Britons to up their rainy-day savings or consider getting relevant insurance policies to safeguard themselves and their loved ones against financial trauma.

Protection insurance is designed to cushion against the financial impact of unexpected and costly events such as serious illness, unemployment, accidents, and death. Worryingly every year a million UK workers suddenly find themselves unable to work due to such reasons.

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 17% of adults considering it a necessity – despite the same amount 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:

The research found that 8% of people are not concerned about what happens to their family’s finances after they are gone. However, 67% of adults confirmed they have people reliant on their income, with children, spouses and parents topping the list of dependents. Furthermore, 44% 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 but only 39% are confident that they enough money saved to cover unexpected costs.

For more than a tenth of UK adults, an incident happening to a friend or family member would be a ‘wake up’ call when it comes to considering protection insurance – while 16% 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.

1 thought on “Just a third of Britons have life insurance leaving millions exposed to potential financial shocks”

  1. Jive Bunny says:

    This reads as an advermational! Before you start shelling out hard earned cash you need to ask will anyone suffer financially if you are suddenly very ill, made unemployed or die. If the answer is “yes” you should look at what you may already have in place.

    If you have an occupational pension scheme you should check:

    1. if it pays you an early retirement income if you have to stop work on medical grounds and if so how is the income calculated to enable you to see if the income would be adequate.

    2. if it pays a lump sum on your death and if so how much to enable you to check it will be enough for your dependants.

    If you think you couldn’t cope financially with short term absence from work through illness you should check if your company pays sick pay above the statutory requirement and if so how much to enable you to see if it would be enough.

    Finally, remember the State will pay unemployment benefit if you are unemployed through no fault of your own and it will meet your REASONABLE housing costs whilst there is an array of disability allowances payable if you are permanently disabled.

    Only when you have completed the above actions should you consider looking at taking out any additional insurance policy.

    This is the whole picture to be considered that this superficial touting for business article should have covered!!

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