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June 19th, 2013

 

Most Brits are financially unprepared to cope with a period of time out of work reports Mintel, as latest research into Income Protection finds that today, two fifths (40%) of people would rely on savings if they had an accident, yet many Brits don’t have enough savings to see them through the month. Indeed, Mintel’s research reveals a worrying lack of savings among the nation’s consumers – over one in five (22%) Brits claim to have no savings, one in ten (10%) less than £500 – and just under half (45%) have £2,000 or less.

The research also highlights the top five ways the nation would finance a period of time out of work in the event of the main income earner being unable to work due to illness or accident for an extended period, these are:- 1. Savings (40%), 2. State/benefits (30%), 3. Family/friends (24%) 4. Employer (12%) and 5. Insurance cover (7% think they have insurance to protect them and 4% are definite they have insurance cover which would pay out in these circumstances).

Stephanie Absolom, Senior Financial Service Analyst said:

“Some 30% of consumers believe that they would rely on the state for financial support if the main income earner in their home was unable to work as a result of an accident or illness. The recent upheaval in the welfare system may encourage consumers to reassess the extent to which they can rely on the state. It may also force some to take greater personal financial responsibility.”

Today, just 3% of people own traditional income protection and just over a fifth (22%) own some type of income protection product*. Despite lack of provision for a prolonged period of absence due to sickness or accident, Mintel’s research shows that 34% of consumers would not consider purchasing income protection under any circumstance and that 20% of people who currently don’t own it have never considered why this is.  Some 42% of those without cover say that they don’t own income protection because they can’t afford it, meanwhile, some 19% of people would be more inclined to purchase income protection insurance if they could be given a premium discount reflecting their healthy living.

“Consumers lack a thorough understanding of what income protection products offer, which is hampering growth in the market. Insurers need to simplify their product and work together in order to identify ways of educating people about income protection. They also need to rebuild trust that has been damaged as a result of the PPI scandal and a lack of transparency.” adds Stephanie.

When it comes to those who work, Mintel’s research revealed two thirds (66%) of non-retirees expressed some concern about not being able to work due to health reasons, compared to just over a third (33%) of working people who claimed no concerns whatsoever about finding themselves unable to work due to an accident, illness or serious health condition.