A huge proportion of people in the UK would suffer financial hardship if they were to be struck down with a serious illness, research from Scottish Widows shows.
A staggering nine in 10 Brits do not have a critical illness policy, despite the fact that more than a fifth (21%) admit their household wouldn’t survive financially if they were unable to work due to a long-term illness. Sadly, people are more likely to insure their mobile phones than take out critical illness cover (12% vs. 9%).
Life insurance, it seems, is also falling out of favour, with just 27% of people in the UK now holding policies – equivalent to around 14 million people. This figure has dropped 7% compared with 2017, a year-on-year decrease of some 3.6 million individuals, data from the Office for National Statistics shows.
Gary Burchett, protection director at Scottish Widows, said: “Insurance providers have a role to play in building trust with consumers and helping people prepare financially in case the unexpected should happen.
“With the legislation establishing our new single financial guidance body having received royal assent, we view it as essential that of the many things the new body must consider, consumer financial resilience to income shocks resulting from health events is a major one.”
Single Income Households Most At Risk
Of particular concern are the households in the UK that rely on just a single income. Their situations are much more precarious because many lack a ‘Plan B’ and a sudden illness could see 100% of their monthly income lost.
While 43% of Brits would use their savings if they or their partner were ill and unable to work, more than a third (35%) admitted said savings would last no more than three months. And more than half (54%) say they’d last no longer than a year.
A significant number of people in the UK (15.5 million) are currently not saving any money at all. One in five (19%) people said they’d rely on state benefits if they or their partner were unable to work for six months. However, many people do not know what kinds of state benefits are available or how much financial assistance they actually provide in a time of need.
When asked why they haven’t taken out critical illness or life insurance, nearly a third (30%) primary breadwinners said they don’t see the need for cover. Moreover, people are (wrongly) under the impression that insurance companies will do anything not to settle claims, with people thinking that just a third (34%) of individual protection claims are paid out by insurance providers each year.
In reality, though, 97.8% of protection insurance claims were paid out in 2017 by insurance providers.
It’s alarming to hear that people are more likely to insure their mobile phones than their own health. While mobile phones can be costly, they can ultimately be replaced. Our health, on the other hand, is something that needs to be well looked after because it cannot be simply replaced in the future.
A highly motivated result’s driven individual with a wealth of experience in the Healthcare & Group Risk market. I have established strong relationships with large multinational clients through excellent interpersonal skills. I have advanced listening, negotiating & influencing skills that allow me succeed in a team based environment. I have comprehensive knowledge of the UK Healthcare & Group Risk market. This knowledge has been obtained through the Chartered Insurance Institute & self study.