ProtectionAug 29 2014

Three-quarters of families now have no protection

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Less than a quarter of UK adults with children under 16 have any form of financial protection, down from 31 per cent in 2013 and a further sign of an increasing protection gap, according to the second part of a major study into the sector published by Scottish Widows.

The report is based on the findings of a major survey of more than 5,000 adults in the UK by YouGov, which found that over half of respondents with children admitted their savings would last just a couple of months if they were unable to work.

Just under half of households with children under 16 also said they are reliant on two incomes, with a further 14 per cent stating that parents or grandparents are dependent on their income.

The revelations will prompt further questions over how to engage the UK population over the need for protection, coming after the first part of the report, published earlier this summer, exposed a severe protection lack even among homeowners.

It found that mortgage holders represented the bulk of protection customers, accounting for 75 per cent of critical illness and 69 per cent of income protection policies in force. However, only 50 per cent had any life cover, while just 17 per cent had a CI policy and 7 per cent an IP policy.

The results echo a separate YouGov study carried out on behalf of Friends Life in the first quarter of this year, which revealed of 2,031 people surveyed only 4 per cent have income protection, 7 per cent have critical illness cover and 23 per cent have life insurance.

The latest portion of the study to be released showed that despite the poor protection uptake, people are realistic about the support available, with only 1 per cent of those with children under 16 believing the state would look after their family if something were to happen to them.

Close to half of this group also said that individuals should take personal responsibility for protecting their income through insuring against the unexpected happening to themselves or a loved one.

Esther Dijkstra, head of protection Scottish Widows, said: “We can’t ignore the financial pressures currently being faced by a large number of UK households, with families often supporting children and parents at the same time, whilst also relying on two incomes.

“However, many families in the UK, particularly those with dependent children, are worryingly under protected and the loss of one income could have significant long term repercussions for all generations.

“It’s not always the easiest topic to discuss but it is one people should make time to think about and set up robust protection that adequately supports their family and safeguards their future.

“The industry also needs to continue to educate people about the importance of financial protection to help convert awareness into action.”