Royal London’s recent report, ‘Tackling the gender pension and wealth gap,’ unveils a concerning trend among UK homeowners, with a vast majority lacking adequate financial protection in the event of illness or disability.
The study indicates that while 63% of homeowners have life insurance, a staggering 80% do not have income protection in place, exposing them to financial instability should they be unable to work due to health issues.
The research highlights the critical need for income protection insurance, which is designed to provide a replacement income to cover monthly bills during periods of illness or disability. Despite the high likelihood of experiencing a long-term illness during one’s working life, many are unprepared for the financial implications, with only 2 in 10 homeowners having such protection.
Jennifer Gilchrist, a protection expert at Royal London, emphasises the importance of financial resilience, especially during the current cost of living crisis. “It’s vital that people understand the importance of having cover beyond just life insurance,” she states, pointing out the higher statistical probability of illness or injury over premature death during working years.
The report also sheds light on the situation for renters, who are even less likely to have adequate insurance, with only 29% having life cover and a mere 6% having income protection. This lack of financial safety nets extends beyond homeowners, affecting a wider demographic struggling to keep a roof over their heads.
Emma Astley, founder of Lancashire-based Cover My Bubble, said: “The rising cost of living means many families up and down the UK are acutely aware of their outgoings and the need to protect their monthly bills. Protection insurance goes way beyond just life insurance, with the benefit of protecting your mortgage. We know our customers often get the biggest reassurance from putting cover in place for their income and expenses, rather than for their life or mortgage cover.
“Where some people need their entire mortgage amount covering, others want the reassurance that their monthly rent and essential bills are protected. As many employers don’t provide sufficient sick pay to cover for prolonged time off work, providing critical illness and income protection, gives individuals and families peace of mind that bills can still be paid when illness and injury strike.
“We also need to create more awareness for families who rent to consider their requirements and put in place the right package of cover. It’s generally accepted that for complete financial protection a little bit of each cover is ideal.
“Accessing advice means individuals’ needs are assessed, allowing families to put in place a package that provides reassurance and gives them protection for many potential life events.”
