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Widespread lack of Income Prtotection

18
Apr

Providers warn of “woefully” unprotected masses despite SSP rise

Providers have welcomed the government’s statutory sick pay increase, but warned against “woefully” high rates of unprotected families as welfare cuts continued.

Bright Grey, said the increase from £85.85 to £86.70 standard SSP – that comes into force on 6 April – was to be welcomed, yet many households would still struggle in the event of accident or illness.

Ian Smart, head of product development and technical support at the provider, said: “Experiencing an illness or accident which is severe enough to prevent you working for a prolonged period is worrying in itself, without the financial implications of losing out on a regular income.

“As such, the increase to SSP is a positive – however, many households would still struggle to cover the cost of their financial obligations on this amount in the absence of their usual salary.”

Smart said the average £484 weekly expenditure for a family in the UK would be unaffordable should primary income be lost, particularly when SSP was only available for 28 weeks.

“With the government still making cuts to public spending it has never been more important for people to have some form of safety net in place to ensure real protection in the event of illness; despite this, only 6% of people consider buying insurance an immediate priority,” Smart added.

“It is unfortunate that the current system does not completely protect vulnerable people and therefore even more vital that people take the necessary steps to protect themselves.”

John Pollock, chief executive of protection and annuities at Legal & General, said there was a much heavier onus now on individuals, amid other welfare cuts, to protect against financial loss.

Yet L&G data shows the majority are unprepared for unforeseen circumstances, with the average UK household having just 19 days worth of savings and financial provisions should an individual be unable to work.

Pollock said: “The announcement of the government’s further welfare cuts is a continuation of a trend in recent years. Welfare provision has been shrinking for a number of years and with a huge budget deficit to bring under control, a massive government debt to be tackled and a faltering economy, it is unlikely that this is set to change anytime soon.

“Add to this the increased longevity of the population at large, the changing demographic trends when it comes to employment and the on-going squeeze on day to day finances it seems that the average Briton will need to take a more proactive approach to guarding against financial disaster as the state provision continues to retreat.”

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