Low awareness of benefit entitlements coupled with a lack of planning is leaving people in the UK open to financial crisis if they lost their job, according to new research from the Post Office.
Nearly half of the working population in the UK are concerned about the risk of losing their job, and on average would need nearly £300 per week to support themselves if they were unemployed.
However, 40 per cent have nothing or less than one month's salary saved, and 71 per cent have no unemployment cover as a back up.
To compound the issue over 75 per cent of people are unaware of what they would be entitled to claim in unemployment benefits despite over a third of people saying they would rely on state benefits to support them financially.
Duncan Caesar-Gordon says: "It is worrying to see how many people do not have a back up in place to protect their finances if they lost their job. The number of people who are willing to rely on benefits without knowing what they would be entitled to receive is of great concern. It is very important that people find out what they would be entitled to and plan properly to cover their mortgage, bills, any debt repayments and other outgoings against the risk of losing an income. For instance, you can take out unemployment cover for a relatively low cost, which also covers you if you were unable to work due to sickness or accident. It is a small price to pay for peace of mind."
Many people are also unaware of how savings affect the amount of job seekers allowance they would be entitled to; 95 per cent of people did not know that having savings of £6,000 or more affects the benefit level awarded. For homeowners, state assistance with a mortgage doesn't kick in until you have been unemployed for nine months, but 96 per cent of mortgage holders were unaware of this and many expected assistance much sooner.
Income protection insurance: News update: December 2008