Four in ten Brits financially prepared for unemployment

March 13, 2009

Latest research from Mintel finds an air of financial confidence in the nation’s ability to cope with unemployment through sickness. Today, as many as four in ten employees (40%) say that they could support themselves for over a year without facing serious financial problems if they were to fall ill and become unable to work for a period of time. A further one in ten (10%) workers felt that they could support themselves for between seven and 12 months without running into financial problems. A significant minority though were less optimistic, with more than a fifth (21%) admitting that they would struggle within two months and over a third (34%) within four months. Younger workers, single people and those living in rented housing were most likely to fear rapid financial ruin. ” it is encouraging to see how many people believe that they can fund themselves through hard times. What is of concern though is the fact that, a considerable proportion of the more optimistic Brits are likely to be displaying misplaced confidence, particularly given the current record levels of indebtedness and worsening economic climate. ” comments Deborah Hughes, Senior Financial Analyst. When asked how Brits would fund themselves through a period of extended absence from work through illness, savings were the most frequently cited resource. Indeed, over a third of workers (35%) said they would draw on savings, although a significant minority would rely on a partner’s income (26%). And it seems that dad’s generosity will once again be tapped into as a fifth of people (22%) said they would look to family generosity to help them through troubled financial times. Meanwhile, just over one in ten (12%) felt that they would have to rely on state benefits. ” although a prolonged period of absence from work through illness is a daunting prospect, many people feel that they could rely on a variety of funding sources in the event of illness, with relatively few resorting to state handouts. ” comments Deborah. “While each of these different means of support may provide people with reassurance during employment, actually having to utilise them is unlikely to be such an appealing prospect. Watching hard-earned savings dwindle or having to ask family members for money, would clearly be tough propositions. “she comments. “What is more, in the current economic climate, realistically, it is becoming less likely that anyone will be able to rely on their partner’s income or family assistance, while any savings will provide a lower-than-anticipated income given the unprecedented low level of interest rates,” adds Deborah. Four million Brits have income protection Today, just 8% of consumers have income protection, which covers them during a period of ill health, this equates to around four million consumers. By contrast, mortgage payment protection insurance (18%) and critical illness (15%) enjoy significantly higher rates of ownership, despite the fact that income protection is widely regarded as the cornerstone of protection. In terms of attitudes towards income protection, almost three in ten (28%) say that insurance policies give them peace of mind, while one in six (16%) felt that extra financial security is worth paying for. However, around a quarter (26%) of people believe that they prefer to save or invest rather than pay insurance premiums. A significant minority questioned the integrity of protection, with more than a fifth (21%) of consumers agreeing that insurers often avoid trying to pay out. “The income protection industry faces a number of obstacles that need to be overcome if it is to fully exploit potential opportunities, not least lack of awareness and trust. And while consumers are unlikely to cut back on home or motor insurance in this tough financial climate, health and protection products might be easier targets for cost cutting. ” concludes Deborah.

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