One in eight people would have to sell their home if they lost their income for any reason.
Research by Zurich has found that only 8% of people have any financial protection against illness or injury, 17% have no disposable income to cover them and 25% have no savings to fall back on.
Cost Of Resilience
The Cost Of Resilience report came from a survey of just over 2,000 people in which more than half admitted they have had to take leave of absence from work through accident, sickness or unemployment in the past, but have done nothing to protect themselves if it should happen again.
Over a quarter of those spoken to said they would have to sell their possessions to keep their heads above water and 14% would have to find a cheaper place to rent.
Out of work
The poll revealed that 131 million working days were lost due to sickness or injury in the UK last year and 45% of UK adults have been out of work for up to a year. One in ten admitted being off work for more than 12 months.
Nine out of ten of those spoken to have no income protection.
Rose St Louis of Zurich UK said: “It’s concerning that so many people have experienced unexpected time out of work, yet have no safety net in place for this potentially happening again. Even more shocking is the number who would have to resort to selling their home, as this action could have a significant impact on the whole family.
“Lack of savings and planning the family finances is putting millions of adults at risk of not being financially resilient, but not taking action could make the situation far worse. Putting the ‘it won’t happen to me’ view to one side, it’s vital that people review their circumstances, to see what support exists to protect their finances and lifestyle.”
The report was produced in co-operation with Dr Jack Lewis who is studying the impact of money, and the products designed to protect its loss, on feelings of resilience.
He said: “The findings demonstrate the very real impact that a period of being unable to work can have.
“We have a tendency to prefer items that we can enjoy immediately over and above valuable things that we have to wait for, even when the latter adds greater value to our lives overall.
“A financial product that pays your salary when you are too ill to work is a strange and perhaps counter-intuitive concept. So, we need to educate people to help them understand that such support exists – products that ease the stress and anxiety stemming from the threat of an unanticipated loss of income.”
Dean Sobers of consumer champion Which? said: “The one protection policy every working adult in the UK should consider is the very one most of us don’t have.
“Given the low level of state benefits available, everyone of working age should consider Income Protection Insurance.”
Journalist George Nixon believes many people may have been put off taking out income protection because they mistook it for the much mis-sold payment protection.
He said: “They are very different. Both apply in circumstances where you have lost your income, but PPI applies only to one specific payment or debt. This can be a loan or monthly credit card payment, which means it is also possible for an individual to have multiple PPI policies depending on how many loans they may have.
“By contrast, income protection is specifically paid to you in the event of losing your income due to illness or injury.
“Income protection pays out a tax-free monthly percentage of your salary when you are off work that can be used for any purpose, such as to cover household bills or mortgage payments.”