One in six people have cancelled or paused protection or private medical insurance (PMI) policies as cost pressures mount, according to research by Howden Life and Health.
The figures illustrate how people are tackling unexpected financial events in the current environment, potentially putting themselves and their families a further financial risk.
The intermediary surveyed 2,000 UK adults – 29% of which said they had been hit by a major financial shock of £5,000 or more in the last year.
It found the majority (71%) were able to cover at least some of the cost with savings and investments, however many were forced to borrow the cash or go further.
According to the data, 36% used a credit card or loan to cover some or all of the cost, rising to 47% of those aged 35-44, while one in four (26%) had to turn to family and friends for help.
For younger people, calling on loved ones was the go-to option, with almost half (45%) of those aged between 18 and 24 having to ask friends or family for financial support.
Overall, one in seven (14%) said they were forced to cut their pension contributions to cover the cost, 12% had to either re-mortgage or take a mortgage holiday to raise the money.
And 16% took the risky step of cancelling or pausing health and protection insurance policies, such as PMI, life insurance and income protection – to cover the cost. This figure rose to one in five under-34s.
Jon Carroll, executive director at Howden Life & Health, said: “With rising living costs and wages failing to keep pace, it’s understandable that many people are struggling to cope with unexpected expenses.
“But it’s really worrying to see so many turning to credit, friends and family, or even cancelling their insurance to make ends meet. Protection policies are there to provide a safety net when the unexpected happens – giving up that cover can leave people far more financially vulnerable in the long run.
“Advice-led decisions can make a real difference to long-term insurability and overall financial resilience. By speaking with an adviser, households can often find more affordable ways to stay protected – whether that’s switching to a better value provider, adjusting levels of cover, or exploring alternative products – rather than losing protection altogether.
“In a tough economy, keeping cover for less is smarter than cancelling it outright,” he added.
