The research examining financial resilience revealed:
- 17% of those who are self-employed said they would have to carry on working through illness or injury.
- Only 6% of self-employed workers have an income protection product that they purchased themselves, compared to 16% of employees surveyed.
- 56% said they would feel more financially resilient if they had a policy that paid them if they were unable to work due to illness or injury.
Traditional workers are still vulnerable to financial shocks, mainly because of little savings to tide them over if unable to work:
- One in five employed and self-employed workers say they would rely on their partner’s income or savings if they were unable to work.
- 19% of UK workers would struggle to pay their mortgage or rent if unable to work for two months due to illness or injury. Over one in ten (11%) would resort to taking on debt (taking out a loan, using overdraft or credit cards).
- 39% of UK workers said they have less than £5,000 in savings, which for many households would only pay the bills for just a few months, considering an average of £9,600 in savings would be needed to pay the bills for around six months.
Protection insurance is seen as a key step to achieving financial goals
Over half (56%) of UK working adults surveyed said they would feel more financially resilient if they had insurance that paid an ‘income’ if they were unable to work due to illness or injury.
Awareness of protection products has risen since the pandemic and led many to reassess their financial and personal priorities. When compared with people without a protection policy in place, policyholders were more likely to see no impact on their financial situation if they were to experience a major health problem. For those aged 25-44:
- 20% of policyholders would be able to pay their mortgage compared to 14% of people without protection cover.
- 20% of policyholders would be able to meet their future financial goals compared to 12% of people without protection cover.
- 16% of policyholders would be able to maintain their financial security compared to 9% without protection cover.
Many consumers understand the need for financial resilience and protecting their income if an accident or illness stops them from working. However, our research has revealed that too many self-employed people do not have any insurance in place to protect their income leaving them financially vulnerable if they are unable to work.
The data also revealed that many UK adults believe that they can rely on their savings, without taking into account how quickly this could truly last them or take to build these back up. Many would last only a few months before they were unable to pay the bills.
Protection and financial resilience is an important aspect of planning and it’s a good idea to consult a financial adviser so that they can help find the right protection cover.