10th June 2015
Britons place far greater importance on their broadband and mobile phones than they do on protecting their mortgage and income, claims new research.
The latest Scottish Widows Protection Report concluded that just 39% of respondents surveyed considered providing financial security for their family in the event of death as essential – down from more than 50% in the last four years. This compares to 80% who considered broadband, and 71% who said that mobile phones, were essential for daily living.
Meanwhile, just 28% of the 5,144 UK adults polled felt financial security for dependents in the event of becoming critically ill or a partner being unable to work, at 18%, was a necessity.
The insurer warned that this slip down the financial priority ladder could leave a significant proportion of the 14.5m mortgage holders in the UK and their families at risk of losing their homes by failing to have adequate protection in place.
In addition, the report found just a third of the UK population have a life insurance policy, less than one in 10 have critical illness cover and just 4% have income protection insurance.
The age group where the largest proportion of people had protection is 35-44, with those who had mortgages most likely to own financial protection products. Almost 45% of 35-49 year-olds feel life insurance is essential, with almost a quarter, at 24%, of the same group feeling that protecting their or their partner’s income is essential, compared to 18% of the general population.
|Age||Mortgage||Life insurance||Critical Illness||Income protection|
Despite this, just under a quarter of those polled did not know how long they could pay the mortgage for or said they would run out of money within five months if they lost significant income.
Against an average £1,085 monthly cost of running the home and more than a third of people, at 35%, carrying non mortgage debt over each month, a vast proportion remain at risk if the unexpected were to happen to themselves or a loved one without this type of safety net in place.
Almost half said they could live on a single income if necessary, while 43% said they would cut back on spending and 38% said they would use savings. Some 27% said they would rely on the state for support if one wage earner was unable to work for six months or more, while a quarter admitted they do not know how they would cope.
Esther Dijkstra, head of protection at Scottish Widows, said: “The Mortgage Market Review has changed the way lenders look at our lifestyle and expenditure. This greater scrutiny, along with more people taking mortgages and potentially longer repayment terms means that we should be reassessing our financial priorities. Yet more people pay attention to making sure their possessions are insured than their own lives.
“Although short-term priorities tend to dominate when it comes to the way we assess our needs and spending, it is more important now than ever to have an appropriate plan in place at the right time to protect our homes and families, not only for peace of mind but to safeguard the time and money we invest throughout working life for the future.”