Only 19% of respondents claim to have a good knowledge of income protection products, suggesting that more needs to be done to raise awareness of the product’s benefit, including swift access to rehabilitation as well as financial support. This lack of understanding also seems to extend to price, with many overestimating how much cover costs. Over a quarter of respondents said they would be willing to spend 5% of their income on it, though such cover can be bought for significantly less.
In the absence of cover, just under half of respondents (47%) expect to rely on savings should the worst happen. Though just under a quarter (23%) also report having savings to last them just one month in such a scenario, while 21% say they have enough to last them up to three months.
This picture emerges as the welfare system faces austerity measures with expansion of the Government’s Work Capability Assessment programme to review the eligibility of a further 1.5 million people already receiving Incapacity Benefit.
Unsurprisingly, over half (56%) of respondents’ preference would be for the Government to cover income loss in the event of illness, followed by their employer for 37%. Nearly half (47%) of UK respondents also reported being willing to accept a better benefits package including
income protection benefits rather than higher wages, suggesting a greater role for employers in helping to protect their employees’ financial well-being.
The income protection gap is a growing challenge, and for a family it can impact on the main breadwinner not being able to work through illness or disability, which can cause devastating financial hardship resulting in the loss of the family home for those worst hit.
As we witness a shift in the burden of responsibility from the state to individuals, people need to take more responsibility to protect themselves and those they love. There are many things to consider when looking to protect your income and should form part of an effective protection planning strategy.