A fifth of Britons are not adequately insured against health or financial shocks, according to Iress Financial Readiness Index.
This comes despite twice as many people believing that they are sufficiently covered.
This shows that there is a disconnect between confidence and reality when it comes to household finances with 41% of people believing that are protected against unexpected events, but only 19% meet the criterial for adequate cover.
Another issue highlighted by the research is that only 14% of the 2,103 people questioned have their income protected if they cannot work due to illness or injury.
It’s good to talk
Advice could be the difference here. Almost three-quarters (71%) of those who took professional advice when buying a home have critical illness cover compared to only 36% of all homeowners.
Iress’ CEO for the UK, Alistair Morgan, said the disconnect between how protected people feel and the reality of their cover represents millions of households.
“Major life events such as buying a home, getting married, or starting a family are key milestones to consider protection cover.
“Closing the protection gap will require greater awareness, earlier engagement and more open conversations about financial resilience,” he added.
Iress’ managing director for UK sourcing, Jennifer Rafferty, added: “The protection gap we’re seeing isn’t just about products, it’s about understanding. Too many people don’t recognise their vulnerabilities until it’s too late.”