People think internet is more important than insurance
As a nation we value having access to broadband and a mobile phone more than providing our family with financial security.
That's according to the Scottish Widows Protection Report, which found that 80% of us consider broadband an essential for daily living, while 71% can't get by without a mobile phone. In contrast, only 28% of us felt that protecting our families in case we become critically ill or unable to work was a necessity.
Critical illness cover is an insurance policy that will prop up your income if you are cannot work for a period due to illness. It's generally sold alongside life insurance, another form of financial protection that should be viewed as essential for anyone with dependents. Yet only 38% of respondents declared it essential.
Esther Dijkstra, head of protection at Scottish Widows, said that borrowers are now under greater scrutiny as a result of the Mortgage Market Review, which should mean that we all reassess our financial priorities. "Yet more people pay attention to making sure their possessions are insured than their own lives," she added.
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How would you cope?
Almost a quarter of the people surveyed admitted that they how no idea how long they would be able to keep up their mortgage repayments if they lost a significant chunk of their income. Those that did hazard a guess thought they would run out of money within five months.
If you are aged 35-44 you are most likely to have financial protection in place, with over-55s the age group who are least likely to have an income safety net. This is perhaps unsurprising as older people are more likely to have savings they can fall back on.
At the other end of the scale 35% of 25 to 34 year olds have a mortgage, but only 5% have taken out an income protection policy and just 10% have critical illness protection. As a result, this age group are woefully underprotected and risk losing their homes if their income falls.
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Age | Mortgage | Life insurance | Critical illness | Income protection |
25-34 | 35% | 24% | 10% | 5% |
35-44 | 54% | 42% | 17% | 7% |
45-54 | 42% | 43% | 12% | 5% |
55+ | 15% | 36% | 2% | 1% |
"Although short-term priorities tend to dominate when it comes to the way we assess our needs and spending, it is more important now than ever to have an appropriate plan in place at the right time to protect out homes and families. Not only for peace of mind but to safeguard the time and money we invest throughout our working life for the future," concluded Dijkstra.
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