"Families aren't simply looking to insure against illness; they're looking for confidence that they will be able to withstand life's unexpected challenges."
- Gregor Sked - Royal London
New data from Royal London has found that millions of working households remain vulnerable to income shocks despite signs of recovery from the cost-of-living crisis.
Royal London's Financial Resilience report found that the average UK adult scores just 33% on its financial resilience barometer, placing the nation in the ‘economically exposed’ category and highlighting how many households remain ill-prepared for unexpected financial setbacks.
35% of employees are classed as financially fragile despite being in work, while a further 40% are considered economically exposed. According to Royal London, this shows that employment is no guarantee of financial security.
The research also found that life shocks can have a profound impact on financial wellbeing. 42% of people who have experienced a life event in the last two years, such as bereavement, divorce or job loss, fall into the financially fragile category.
Financially fragile households have average cash savings of just £1,136 and only £77 of discretionary income each month after essential spending.
Royal London says that the findings highlight the need for a broader conversation about family financial resilience, and the role protection products can play in helping households cope with unexpected events.
This news follows a rise in demand for income protection for a second consecutive year, with industry data showing applications increased by 7% in 2025 following growth in 2024. Yet at the same time, advisers and providers continue to highlight a significant protection gap.
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"When people think about protection, they often focus on the biggest life events, such as death or serious illness," Gregor Sked, senior protection technical manager at Royal London, said. "Those conversations remain incredibly important, but modern family finances can be knocked off course by a much wider range of pressures.
"Income has always been the engine room of a family's finances. Our Financial Resilience report shows many households are operating with very little financial breathing space, meaning even a short interruption to earnings can have significant consequences when cash savings are low and disposable income is limited.
"That's why income protection should be viewed as part of a broader financial resilience strategy. Families aren't simply looking to insure against illness; they're looking for confidence that they will be able to withstand life's unexpected challenges."
