But fewer than one in 20 has income protection cover
More than one in five (23%) Brits say their savings wouldn’t last longer than a couple of months if they were unable to work, but less than 5% protects their income, research suggests.
The study from Scottish Widows found six in 10 UK working adults with savings said they would last no longer than six months if they became unable to work, while fewer than one in 10 (8%) said they would manage less than a month.
Despite a 7% increase over the past 12 months in the average amount people are saving, fewer than one in 20 (4%) have income protection (IP) cover.
More than 80% of the 5,000 people polled said they have heard of life insurance, IP and critical illness (CI) cover.
How long could you last?
Less than one in 10 (8%) had a CI policy, compared with almost half (48%) who have taken out home insurance.
The poll also found that one in seven Brits have been affected by critical illness and more than a third (37%) rely on two incomes.
Out of those affected by critical illness, 42% said they had to make lifestyle changes in order to cope with the financial impact, while only one in 20 had a policy in place.
Of those who said they had to reduce outgoings or build extra money for extra living expenses in the past 12 months, more than a quarter (27%) chose to cut down on gifts for family and friends, 27% said they avoided putting the heating on and one in five sold items on line to generate extra cash.
People expect their financial priorities to change the most when buying a property (19%), as a result of government spending cuts and welfare benefits (18%) and having children (15%).
Despite this, more than a than a third (35%) are carrying non-mortgage debt over each month and this rises to 52% of 25-34 year-olds and 48% of 35-44 year olds.
The survey found that 39% considered providing financial security for their family in the event of death as essential – a drop from more than half in four years – compared to eight out of 10 (80%) who considered broadband and mobile phones (71%) essential for daily living.
Esther Dijkstra, head of protection at Scottish Widows, said: “The ongoing struggle between short versus long-term financial priorities continues to threaten people’s financial resilience, despite an awareness of the key points at which these change and the risk of savings running out should they become unable to work.”
Unfortunately people tend to think it won’t happen to them, but as the statistics above suggest it does. Income protection is a relatively low cost policy if it is done early enough. Guaranteed premiums with a flexible plan will enable you to carry the policy through to later life.
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