Protection Products  

Third of UK employees lack financial safety net

Third of UK employees lack financial safety net

Almost a third (30 per cent) of UK employees have no financial back-up plans in place should they or a loved one lose their primary source of income.

Figures released by Legal and General reveal the extent of the country’s protection gap, with just 13 per cent of employees holding a critical illness policy, 9 per cent having an income protection policy and less than a third holding life insurance.

Nearly half (47 per cent) would have to rely on their personal savings if they were affected by events such as redundancy, critical illness, disability or death, while 6 per cent said they would rely on friends for support.

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The findings are based on a survey of 2,000 full and part-time employees as part of L&G’s Deadline to Breadline campaign.

More than one in three people (34 per cent) said that their biggest worry in the event of their death would be that their family was not financially protected.

One-third (33 per cent) said that losing their home would be their main concern if they suffered from a critical illness or disability, while nearly half (48 per cent) said they would worry about paying their mortgage or rent if they lost their salary.

Richard Kateley, head of intermediary development at Legal & General, said: “We know that protection is not always a priority for clients. However, less than a fifth of employees have a critical illness policy in place and, even more worryingly, more than 90 per cent are not protecting their income. 

“As an industry, we must clearly do more to raise awareness about the importance of these products and the positive impact they can have on people’s lives. 

“Advisers are perhaps better placed than anyone else to help clients consider how they would sustain their current lifestyle should they be unable to work due to incapacity caused by a long-term illness or injury, reinforcing the benefits of protection policies.”

Emma Thompson, life office relationship director at LifeSearch, said: “I think the stats are useful for advisers who don’t sell as much protection as they could do to help them sell more or at least point clients in the right direction where they can seek advice.

“But what do we do as an industry to react to it, because it does not seem to change that much? Five years ago, the stats were similar. What have we done in terms of making the process easier, marketing the products and getting the message out there? That is the challenge we face.”