Despite the level of fear surrounding unemployment and debts in the current environment, research from Barclays Financial Planning shows a worrying trend of people not providing themselves and their families with a safety net.
Over half of people are worried about being able to maintain their outgoings within the next 12 months, pushing essential safety nets like income protection and critical illness cover to the bottom of their priorities. Nearly half of UK adults have no protection policies in place whatsoever, to protect them and their families in the event of losing their income, health issues or even death.
The safety net gap:
Those aged between 35 to 54 often have the most responsibilities in terms of dependants and outgoings, but 45 per cent have no life cover and 74 per cent have no income protection insurance.
Alison Tattersall at Barclays Financial Planning says: "When finances are tight it is often responsibilities like protection policies that fall to a lower priority. These policies protect outcomes that people do not want to think about. But people must consider the financial consequences of what would happen if they were unable to work, or their dependents' situation if they died. It would be far worse than any concerns they currently have over struggling to meet their outgoings. Our research indicates that a large number of people are without any protection at all, or that they don't realise they have any policies in force. Both are equally as worrying, especially given the current climate."
When looking at what other safety nets people could be relying on, the research reveals that 60 per cent admit to having nothing saved, having less than one month's salary in the bank, or not knowing what they have in savings at all. Worryingly the report also reveals that nearly 40 per cent do not receive benefits such as sick pay, death in service or health insurance, or simply do not know if they would be entitled to them. Coupled with 81 per cent not knowing what they would receive in benefits from the state if they were too ill to work, it shows that many people haven't thought through their plan B.
Income protection insurance: News update: December 2008