Around 52% of working couples rely on both earnings for expenses, highlighting the financial impact of sickness or accidents preventing people from working.
LV= emphasises in its second Reaching Resilience report that vulnerable groups like first-time buyers, self-employed people, and increasing families risk financial derailment, with one in five unable to cope for more than a month without income.
Furthermore, while 54% of UK workers think that having insurance that pays for monthly expenses would improve financial resilience, just 45% of self-employed individuals could rely on savings if they were unable to work for two months—a 15% decrease from the previous year.
Renters worry about fulfilling their financial goals because of health concerns in 45% of cases, and 75% never visit a financial consultant.
A third of first-time purchasers would rely on short-term loans or their spouses’ income if they were unable to work. Every UK worker provides financial support for three persons on average; 10% provide for five or more.
However, more than half do not have protection insurance, and 13% would continue to work in the event of illness or accident.
Moreover, 31% worry that a significant health problem will affect their ability to make rent or mortgage payments, and 33% lack confidence about their ability to cope with critical illnesses financially.
LV= protection sales and marketing director Mike Farrell says: “It’s important for us to raise awareness of the protection gap, as many workers may not be as financially resilient as they consider themselves to be. This presents a real challenge that we must take on as an industry and help people to rethink their ‘plan B’ options.
“Our Reaching Resilience report reveals that many UK adults believe that they can rely on their savings, without taking into account how quickly they could run out of money or how long it would take to rebuild their savings. Almost half of workers said that they would rely on savings, but four in ten don’t have three months’ average outgoings saved**. Instead, many would last only a couple of months before they were unable to pay their mortgage or rent.
“We hope that the LV= research findings will help to equip advisers with relevant insights to engage with clients and show the benefits of protection insurance in a way that resonates with them.”
Income Protection Task Force (IPTF) co-chair Vicky Churcher says: “We welcome the LV= Reaching Resilience report as it emphasises both the need and significance of advisers addressing their clients’ protection needs directly or referring them to others to help people get the right cover. The report also offers 14 valuable conversation starter questions, providing an excellent approach to introducing protection to customers.”
LifeSearch chief marketing officer Justin Harper says: “The LV= Reaching Resilience report reveals many unsettling insights. Too few people are financially prepared for life’s shocks. Some people have no Plan B, or are overly confident that their contingencies will support them, which isn’t always the case.
“While, as people, we can struggle with loving, valuing and protecting ourselves, one of the astonishing findings from LV= is other’s reliance on us – three people rely on the income of an average UK worker.
“Insurers such as LV= have the ‘solutions’, but the challenge remains in presenting protection to consumers in the right way. It needs to turn up at the time of need and that is relevant and meaningful to them.”
