Moneysworth wins Best Small Protection Advice Firm 2023!
Learn more
Accessibility Options
Call us 01625 462 744
The new Reaching Resilience report from insurer LV= has revealed the gaps present in many people’s strategies for protecting themselves against the adverse financial consequences of illness or injury.
When asked how they would cover outgoings if they were unable to work for two months or more, the most popular answer, given by 47% of survey respondents, was that they would rely on savings or rainy day emergency funds. Just how realistic this is for many people was called into question by a separate finding that only 42% of households could manage for more than three months without an income. One in ten people said they had no savings at all and around 25% had less than 1,000 put by for an emergency fund.
12% of employed people and as many as 19% of the self-employed said they would continue working through their illness or injury, despite the fact that this may be impossible if the problem is severe and/or causes then person to spend a period in hospital.
The average working person’s income supports three people, according to the survey. Some respondents even classed their pets as people dependent on their income, although most mentioned needing to support their partner, children or other relatives, as well as ex-partners and their children. Two-thirds of the working population also have some form of debt, and of course lenders would expect debt repayments to continue if the person was absent from work.
Taking out protection policies in advance can very much help to alleviate any concerns in this area. The survey found that, while 52% of UK workers have some form of protection policy, only 27% have income protection insurance and only 29% have critical illness insurance.
Life insurance is something you should very much be considering from the start of your adult life, especially if you have children, or a mortgage, or you earn more than your partner.
Income protection – which pays a replacement income should you be unable to work due to accident or sickness – is something you need to consider taking out as soon as you are in employment. What would the consequences be were you to cease receiving a wage and be forced to reply on the very limited state support?
Critical illness insurance might also be appropriate for adults of any age – after all you can be diagnosed with a serious illness at any age, no matter how young and healthy you might feel. This type of insurance is often taken out to protect a mortgage, and ensure the balance is paid off were you to be diagnosed with a critical illness. It is important to note, however, that critical illness can be a useful way of ensuring that you (and any children) can receive a lump sum to pay for medical treatment or nursing costs, or for the necessary modifications to your home to adapt to your condition.
If you would like to find out more, then contact Moneysworth today to see how we can help.
