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Insurance ignorance

02
Mar

The Protection Oversight research undertaken on behalf of Friends Provident has revealed a shocking consumer ignorance when it comes to protection products.

The research showed that nearly half (24 million) of people in the UK have no Insurance in place to cover loss of income through illness or death of a breadwinner.

Even those that have considered taking some action would be underinsured by an average of £14,500 per year.

Alarmingly, a third of people think they could live on less than 35% of their take home pay if they were unable to work through illness or injury. Based on an average weekly income of £489, that means they would have a maximum income of £171 per week, a massive £300 less than the current average weekly household expenditure of £471, and not enough to survive on especially if there is only one breadwinner in the household.

Of those who have policies in place, over half (53%) have no idea how much they would receive if they were to make a claim. This suggests the policies they have may no longer be adequate if their circumstances have changed, for example, their salary has increased, they have married or had children since taking out the policy.

Ed Stuart-Brown, head of protection sales commenting on the Protection Oversight research said:

“The findings in the Protection Oversight research are very worrying. Imagine being told that you had just been given a 66% cut in your income – the impact of that for most people would be catastrophic. It’s time people took control of their future and looked at this in a responsible way, instead of burying their heads in the sand, especially in today’s environment. Ignorance is not bliss, it’s irresponsible. The shortfall in protection of £14,500 per year shows there is a huge opportunity for both advisers and insurers to educate people.

“It’s a sad fact of Life that the unthinkable can and does happen and the last thing you would want is to leave yourself or your family in dire financial straits. I would also urge those who do have cover to dig out their policies and review their level of cover to ensure they have made adequate provisions should the unexpected happen. Unfortunately it’s too late to do anything about it once illness, accident or death occurs. If you are fit and well now is the time to act; the cost for most people is a fraction of the potential benefits they could receive and it’s a simple matter to review your needs with your adviser.”

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