Worryingly, the Reaching Resilience report revealed that only 6% of self-employed workers have an income protection product that they purchased themselves, compared to 16% of employees surveyed. 60% of 25-44-year-olds without protection say they would feel more financially resilient if they had a policy that paid them if they were unable to work due to illness or injury.
Traditional workers are still vulnerable to financial shocks
LV= found that one in five employed and self-employed workers say they would rely on their partner’s income or savings if they were unable to work, with 19% struggling to pay their mortgage or rent if unable to work for two months due to illness or injury. 11% would resort to taking on debt, including taking out a loan, using overdraft, or credit cards.
35% of UK workers who hold debt other than a mortgage owe up to £5,000 and 26% of working adults have less than £1,000 in savings or no savings at all.
Protection insurance is seen as a key step to achieving financial goals
56% of UK working adults surveyed said they would feel more financially resilient if they had insurance that paid an ‘income’ if they were unable to work due to illness or injury.
Awareness of protection products has risen since the pandemic and led many to reassess their financial and personal priorities. When compared with people without a protection policy in place, policyholders were more likely to see no impact on their financial situation if they were to experience a major health problem.
For those aged 25-44
20% of policyholders would be able to pay their mortgage compared to 15% of people without protection cover
20% of policyholders would be able to meet their future financial goals compared to 12% of people without protection cover
16% of policyholders would be able to maintain their financial security compared to 10% without protection cover
Mike Farrell, Protection Sales and Marketing Director at LV=, said: “It is good to see that many consumers understand the need for financial resilience and protecting their income if accident and illness stop them working.
“However, too many self-employed people do not have any insurance in place to protect their income leaving them financially vulnerable if they are unable to work.
“The data reveals that many UK adults believe that they can rely on their savings, without taking into account how quickly this could truly last them or take to build these back up. Many would last only a couple of months before they were unable to pay their mortgage or rent.
“Protection and financial resilience is an important aspect of planning and it’s a good idea for people to consult a financial adviser to find the right policies that protect their income.”
