A financial shock or emergency would set back more than 17m UK adults considerably, new research shows. One in three of us feel we’d be unable to recover quickly if something unexpected happened, a report from our partner Zurich UK has revealed - and many of us are more likely to insure our mobile phone than our income!
The Cost of Resilience* report, which was developed with neuroscientist Dr Jack Lewis, explores how our finances - as well as the protection insurances we have - impact on our feelings of resilience. The findings show that 34% of UK adults feel they wouldn’t be able to recover quickly from an unexpected financial shock or loss of income, whilst one in seven have ‘no idea’ whether they would be able to cope or not.
The survey also found that:
- 24% of UK adults have no savings
- 26% do not feel in control of their life
- 33% say that earning between £1,000 and £2,000 per month would help them to feel financially resilient
- 18% of Brits feel they would need this figure to be between £2,000 and £4,000 per month
‘Feeling resilient’ is defined as having the ability to recover from shock, whether emotional or financial. The study found that, in order to feel financially resilient:
- Nearly two in five (37%) said they would require savings
- A quarter (22%) said they would need not to be in any debt
- One in seven (17%) said they would need a secure job
According to the Office for National Statistics, the average net UK individual income is £1,278, leaving many adults earning slightly less than the amount needed to feel financially resilient. This, combined with people not being in a position to overcome a financial shock or loss of income - such as having to take time off work due to sickness - means many would struggle significantly if disaster were to strike.
Despite a third saying they would struggle to recover from a financial shock or loss of earnings, just one in ten (11%) has income protection. Yet this is one of the most significant financial products that shields your pay and is cheaper than consumers often realise. In comparison, 71% of those questioned have home insurance, which is usually required by a mortgage lender, 70% have travel insurance and 18% have mobile phone cover.
Income protection insurance replaces the majority of your monthly salary should you be unable to work due to unforeseen circumstances, such as an accident, illness or involuntary redundancy. You can choose from a short or long-term policy and get online income protection comparison quotes to find the cover that best suits your circumstances.
Rose St Louis of Zurich UK said: “It is worrying that one in three do not feel they would be able to recover from a financial shock or loss of income and do not have the savings in place they need to feel financially resilient. The most valuable asset we have is ourselves and our ability to generate an income. Therefore, it’s a concern that nine in ten are likely to prioritise insuring their mobile phone over themselves.
“We need to encourage people to review their circumstances, assess the solutions available and consider what support exists to protect them and reduce feelings of financial vulnerability. Products like an income protection plan, which is designed to provide a regular income if you are unable to work due to illness or disability, could help individuals to feel less vulnerable and more financially resilient.”
* The online YouGov survey took place between June 1-4 2018 and involved 2,059 adults.