Income Protection  

Four out of five lack financial safety net

Four out of five lack financial safety net

Savers are failing to make plans for an expected downturn in their personal finances, according to a report by HSBC.

More than a third (35 per cent) of people in the UK think they will be financially worse off in the next three years, according to HSBC’s latest Power of Protection report, titled Facing the Future.

Despite this, four out of five respondents (84 per cent) said they did not have an insurance policy that would cover regular costs if a family member had a serious illness or accident that would prevent them from working.

Meanwhile 47 per cent said their dependents would not be able to manage financially if they were unable to work.

Three quarters of people surveyed had not considered putting a will or testament in place and 79 per cent did not have a retirement plan.

While the majority saw their family’s health and wellbeing (74 per cent) as most important to their own future, more than three quarters (88 per cent) felt they did not have enough money to look after their family’s health.

According to the report, 44 per cent of families who are just about managing day-to-day have never had a conversation about their long term financial security. 

In contrast, the overwhelming majority of people (81 per cent) who have had a conversation about their long-term financial security are managing well.

The study was based on a survey of 1,000 UK adults aged 25 and over, which was conducted by Kantar TNS between March and May 2017.

Michelle Andrews, HSBC's head of UK premier and wealth insights, said: “Long-term financial planning allows people to be in the strongest possible position to support their families and achieve their own aspirations.

“We would encourage everyone to think about the future and regularly assess their financial situation. It’s important to understand both the positive and negative effects that expected and unexpected events can have, to ensure we can confidently plan for the future.”

David Dixon, IFA at Hastings-based Alexander James Financial Planning, said: “Income protection is not very well publicised. Certainly, with my clients, unless I suggest it, it is not something they think of.

"Unless they have an IFA, they are simply not aware of it.

“I have been running my own company for the past seven or eight years. The people who have got income protection are happy to look at it and renew it, but especially people who are self-employed are not aware of it and should have it.

“It needs greater publicity. How often do you see an advert for income protection? Most people only get to hear about it from their bank or an IFA like myself.

"The big insurance companies need to put some advertising in the press and on TV explaining it. There is a need to raise public consciousness and the only way to do that is via big advertising campaigns.”