One in five Brits have no financial back-up plan
A worrying 21% of Brits admit their household would not be financially secure for any length of time if it lost its main income through unexpected circumstances, according to Scottish Widows. And over a third would need to raid their savings if they were unable to work.
But despite this many people continue to bury their head in the sand when it comes to having a financial backup plan, prioritising internet connection and mobile phones over life or critical illness cover.
Scottish Widows’ latest protection research revealed a quarter (25%) of Brits could only afford to pay household bills for a maximum of three months if they or their partner were unable to work due to long-term illness, and just over a quarter (26%) could only make a maximum of three monthly mortgage repayments. A further fifth (18%) admit they aren’t sure how long they would be able to cope with their mortgage repayments.
Yet only 29% think it’s essential to provide financial security for dependents if they become critically ill and only 40% think it’s essential to provide security for dependents if they die.
This apathy is reflected in protection take-up rates, as only a third (32%) of people have life insurance, and just one in 10 have taken out critical illness cover.
Johnny Timpson, protection specialist at Scottish Widows, said “While none of us ever want to think about the worst, our findings show that there are an alarming number of families who could face a significant financial struggle in the event of an unexpected loss of income due to serious illness or death.
“No matter what our personal circumstances, it is vital for all of us to ensure we have an appropriate plan in place to protect our finances, helping avoid the need to dip into our savings, which could present even greater challenges further down the line.”