"Less than a fifth of employees have a critical illness policy in place and, even more worryingly, more than 90% are not protecting their income"
30% of UK employees have no financial support to help them should they or a loved one be affected by events such as redundancy, critical illness, disability or death.
The results also highlighted the UK’s ‘protection gap’, with just 13% of employees holding a critical illness policy. Less than a third had taken out life insurance and just 9% also had an income protection policy.
Of those who did have some form of financial back-up, nearly half (47%) would have to rely on their personal savings if the worst was to happen. Worryingly, 6% said they would rely on friends for support.
Despite this, more than one in three (34%) said that their biggest worry in the event of their death would be that their family was not financially protected. One-third (33%) said that losing their home would be their main concern if they suffered from a critical illness or disability, and nearly half (48%) said they would worry about paying their mortgage or rent if they lost their salary.
Richard Kateley, Head of Intermediary Development at Legal & General, said: “Whilst it is encouraging to see that nearly half of those employees we surveyed had a financial safety net in place to fall back on should they lose their source of income, the question these individuals need to ask themselves is whether this safety net is up to the task, should they suffer from something as devastating as a critical illness.
“However, what is perhaps more concerning is that nearly a third had no back-up in place to support their lifestyle if this were to happen. This is a worryingly high figure and it is also concerning that 16% and 6% of employees plan intend to rely on financial support from family or friends respectively.
“We know that protection is not always a priority for clients. However, less than a fifth of employees have a critical illness policy in place and, even more worryingly, more than 90% are not protecting their income. As an industry, we must clearly do more to raise awareness about the importance of these products and the positive impact they can have on people’s lives. Advisers are perhaps better placed than anyone else to help clients consider how they would sustain their current lifestyle should they be unable to work due to incapacity caused by a long-term illness or injury, reinforcing the benefits of protection policies.”
