The importance of protection has been highlighted in a report suggesting the average person would last just 52 days financially if they were unable to work.
The Yorkshire Building Society study says Britons are living on a “financial tightrope”, pointing out average monthly outgoings are £1,445 while the average accessible savings are just £2,474.
Over a third of people would only survive for 11 days with less than £500 in accessible savings, the report suggests. It says those most exposed to the savings gap include divorcees, the part-time employed as well as those aged between 35 and 44, and 16 and 24.
Nine in ten people have no personal income protection in place, while 68% have no idea how they would survive if they were unable to work, or have unrealistic expectations of how they would continue to meet their daily expenditure.
Approximately a fifth of the 2,000 respondents believe they could manage on state benefit allowances. However, as average weekly outgoings of respondents equaled £333.56, there is a weekly shortfall of £258.16 and the current state benefit totals £75.40.
Around 5% of Britons would consider selling their home to raise cash quickly, yet in a virtually stagnant housing market with some consumers already contending with negative equity, people cannot rely on a quick sell or rent to release the equity, says Yorkshire Building Society.
The research also shows 10% of Britons who do have some protection cover in place, the majority are focused on covering themselves in the event of death with nearly half of those with cover opting for life insurance over critical illness and income protection.
Although people are therefore better prepared for death, they may have underestimated the burden that long-term sickness would have on finances as well as their family.
Tanya Jackson, corporate affairs manager at Yorkshire Building Society says: "In the current economic climate, this research paints an extremely alarming picture for those consumers without any protection products in place.”
"It is extremely worrying to see that many Britons are ‘living on the edge' and we therefore urge consumers to take a look at their protection needs in order to assess how they would cope financially if they were taken ill and whether they would benefit from the security that a protection scheme provides."IFAonline
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