Just 15% of working adults have their own income protection (IP) policy in place, while 12% have IP provided by their employer, according to research by protection specialist LV=.
To mark Income Protection Awareness Week (17-21 October), LV= surveyed 4,000 UK adults to explore their attitudes to IP. The research also found that 26% of those who did not have an IP product already would like one, while 60% of 25 to 44-year-olds without one would feel more financially resilient if they had a policy that paid if they were unable to work due to illness or injury.
The research highlighted that 25% of mortgage holders had IP, compared with 11% of renters. A quarter (24%) of mortgage holders said they did not think they needed a policy. However, 19% of UK employees would struggle to pay their mortgage or rent if they could not work for two months due to illness or injury.
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A quarter (26%) of working Brits had less than £1,000 in savings, or no savings at all, with 19% having to rely on their partner’s income to cover bills if they were unable to work. Only half (49%) said they would be able to survive more than four months without an income.
During 2021, LV= paid £13.6 million in new and on-going IP claims. The most commonly claimed conditions were musculoskeletal issues (20%), fractures (20%) and cancer (17%), representing nearly three-fifths of all IP claims.
Mike Farrell, protection sales director at LV=, said: “As the impact of the cost of living crisis deepens, people are becoming aware of their financial resilience and the value that income protection insurance brings. With energy bills and mortgage and rent payments rising, increasing numbers of people are worried about how they would pay their bills if an accident or illness prevented them working.
“Income protection remains a flexible way to maintain a financial safety net if someone is unable to rely on cash savings. Budget income protection plans with 12 and 24 month options provide an income for specified periods while giving more flexibility to customers.”