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Homeowners unprepared for financial shocks

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Almost a third of people have experienced some financial shock in the past five years, yet many remain without the correct insurance.

Market research by the Money Advice Service and Association of British Insurers found that 32% of adults had been affected by a financial event, such as losing a job or being unable to work with injury.

However, only 35% had the correct insurance in place to support them following the financial blow, potentially putting homes and other assets at risk.

With many families still struggling to manage household finances, those without any savings or insurance policies are being urged to protect themselves in future.

This can include setting up a rainy-day savings fund or taking out relevant insurance policies, Money Advice Service said.

It said just 17% considered income protection a necessity, despite 18% of people knowing someone who has struggled following a financial event.

Some 39% of people said they were confident they had enough cash in the bank to help them with unexpected costs, but the remainder are at risk.

Andy Webb, money expert at the Money Advice Service, said: “The research highlighted that there is a big gap between the number of people who experience financial shocks, and those that protect their lifestyles by either saving for a rainy day or considering the relevant protection insurance.

“As the research suggested, many of us find it difficult to comprehend the thought of illness and death and as a consequence we may be tempted to put safeguarding our finances to the back of our minds. We never know what is just around the corner but it is important for consumers have all the information they need to plan ahead for how they would cope financially should the worst happen.

“Creating a rainy day fund is a good first step to safeguard both yourself and your family. We would also urge people to consider whether insurance might be an option within their planning and budgeting.”

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