Only one in four people believe they are adequately protected if they lose the main income from their household, according to a report by Scottish Widows.
The research of 4,722 people aged over 18 says the nation is “dramatically under-prepared” for the loss of a breadwinner’s income through either death or illness.
Despite many women wanting to move back to being ‘stay at home’ mothers, the report reveals this is not possible for over 10 million households in the UK, which are dependent on two or more salaries to maintain an acceptable standard of living.
Three out of 10 respondents believe they would be okay in the short term if they lose the main income from their household and four out of ten say they would be in trouble.
The report suggests 57p in every pound of people’s take home pay is being spent on essentials – including mortgage repayments, managing debt, food, gas, electricity and council tax – but only 43p is protected against long-term illness and 35p against death.
In addition, it says the average British household needs to have enough protection to last eight years in case of a serious illness and 12 years in case of the death of a breadwinner.
But the report suggests people typically have £98,000 in life cover and £80,000 in protection against long-term illness.
Moreover, one in four respondents have less than £3,000 saved for a rainy day but the average household spends £1,100 a month on essentials, meaning for more than half of all households in the UK their savings will last less than three months.
Nick Kirwan, protection market director at Scottish Widows, says: “The majority of the population is walking a financial high wire without a safety net. Nobody knows what is around the corner, but we have to accept that all too often illness does strike and accidents do happen.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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