The majority of UK workers (54% ) say they would feel more financially resilient if they had insurance that would cover their monthly outgoings if they could not work, according to a research report from LV=.
Despite this, more than half of UK workers have no form of protection insurance in place, with 13% stating that they would have to carry on working even if they were ill or injured.
The LV= Reaching Resilience report also showed that 52% of working couples need both incomes to pay their monthly outgoings.
The report said: “First time buyers, self-employed workers and growing families are at high risk of being derailed financially if they were unable to work, with around one in five saying they’d be able to manage for less than a month without an income.
The report also found that 45% of self-employed workers could rely on their savings if they were unable to work for two months or more. That is 15% fewer than last year.
And a third (34%) of first-time buyers would rely on their partner’s income if they were unable to work for two months or more with 16% saying they would use short-term loans.
LV= surveyed 4,000 nationally representative UK adults via an online omnibus conducted by Opinium in between 23 November and 3 December 2023.
A total of 45% of renters are worried about their ability to meet their financial goals if they were to suffer a major health problem or serious injury.
A total of 75% of renters have never used a financial adviser.
The Reaching Resilience data also showed that the average UK worker’s income supports three people, with 10% of working people supporting five or more people financially.
When asked about the effects of potentially experiencing a major health problem or serious injury, 31% of UK workers said that it would have a large impact on their ability to pay their mortgage or rent payments.
A third (33%) also said that they wouldn’t feel confident about being able to cope financially with being diagnosed with a critical illness.
Real challenge
Mike Farrell, protection sales and marketing director at LV=, said: “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 10 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.”
Justin Harper, chief marketing officer at LifeSearch, said: ”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.”