LV= reveals “unsettling insights” with 75% of renters struggling on without financial advice

According to the latest LV= ‘Reaching Resilience’ report, 52% of working couples need both incomes to pay their monthly expenses, leaving first-time buyers (FTBs), self-employed professionals, and growing families most at risk of financial crisis.

Related topics:  LV=,  IP
Tabitha Lambie | Editor, Protection Reporter
23rd February 2024
Struggling to pay rent
"Some people have no Plan B or are overly confident that their contingencies will support them, which isn’t always the case."
- Justin Harper, Chief Marketing Officer at LifeSearch

Of those surveyed (4,000), 54% of employees in the UK said they’d feel more financially resilient if they had a protection policy to cover monthly expenses if they were unable to work due to ill-health or injury. This was especially prevalent amongst self-employed professionals with only 45% able to rely on savings if they were out of work for two months or more – this is 15% less than last year.

Notably, 34% of first-time buyers (FTBs) said they’d rely on their partner’s income if they were unable to work for two months or more, while 16% said they’d use short-term loans. With recent research from property lender, Together, finding that 40% of Millennials either move back in with their parents to save for a deposit or ask family to fund the deposit for their first home, this is especially concerning.

READ MORE: A fifth of Millennials relying on parents to help secure their home

Among renters, 45% were worried about paying monthly expenses if they were to experience ill-health or injury. Given that 46% of renters surveyed by Zero Deposit described their current position as having to make ends meet, with next to no disposable income once their expenses were accounted for, this is an alarming statistic.

READ MORE: High cost-of-living sees 11% of tenants turning to food banks to get by

Unfortunately, three quarters (75%) of renters have never used a financial adviser despite the average employee’s income supporting up to three individuals – 10% of employees support five or more people financially.

When quizzed on the potential impact of ill-health or injury, 31% of employees agreed that it would have a ‘large impact’ on their ability to pay mortgage or rent payments. Likewise, 33% said they wouldn’t feel confident about their finances after a critical illness diagnosis.

Mike Farrell, Protection Sales & Marketing Director at LV, said it’s important to raise awareness of the protection gap since employees may not be as financially resilient as they consider themselves to be. “This presents a real challenge that we must take on as an industry and help people rethink their ‘Plan B’ options,” he explained.

Mike highlighted that the latest LV= ‘Reaching Resilience’ report proves that most employees who think they can rely on savings haven’t considered how quickly these funds will deplete. “Many would last only a couple of months before they were unable to pay their mortgage or rent […] we hope that these findings will help equip advisers with relevant insights to engage with clients and show the benefits of protection in a way that resonates with them,” he added.

Vicky Churcher, Co-Chair of the Income Protection Taskforce (IPTF), said this report emphasises the “need and significance of advisers addressing their clients’ protection needs directly or referring them to others to help people get the right cover.” Justin Harper, Chief Marketing Officer at LifeSearch, said the report reveals “many unsettling insights” with too few people financially prepared for life’s shocks. “Some people have no Plan B or are overly confident that their contingencies will support them, which isn’t always the case,” he stressed.

While Justin believes insurers such as LV= have the ‘solutions’, presenting protection in the right way remains an issue. “It needs to turn up at the time of need when it’s relevant and meaningful to them,” he concluded.

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