Only 39% considered providing financial security for their family as essential
Britons consider having an Internet connection and mobile phone to be greater financial priorities than protecting mortgage and income, according to new research.
The latest Scottish Widows Protection Report revealed that only 39% considered providing financial security for their family in the event of death as essential – which has dropped from more than half in four years – compared to eight out of ten (80%) who considered broadband and mobile phones (71%) essential for daily living.
Becoming critically ill
Meanwhile, just over a quarter (28%) of the 5,144 UK adults polled felt financial security for dependants in the event of becoming critically ill or a partner being unable to work (18%) was a necessity.
This slip down the financial priority ladder could leave a significant proportion of the 14.5 million mortgage holders in the UK and their families at risk of losing their homes by failing to have adequate protection in place. The report found just a third (33%) of the UK population have a life insurance policy, less than one in ten (8%) have critical illness cover and fewer than one in twenty (4%) have income protection insurance.
Financial protection
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 (24%) of the same group feeling that protecting their or their partner’s income is essential, compared to 18% of the general population.
Despite this, just under a quarter of those polled didn’t 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.
Remain at risk
Against an average £1,085 monthly cost of running the home and more than a third of people (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, cutting back on spending (43%), using savings (38%) and relying on the state (27%) for support if one wage earner was unable to work for six months or more. Less than one in ten (8%) would claim on an insurance policy, and a quarter don’t know how they would cope.
Lifestyle and expenditure
The Mortgage Market Review has placed greater scrutiny over lifestyle and expenditure, with an increase in mortgage holders and potential new longer repayment terms impacting the way we assess our short- and longer-term financial priorities, yet more[1] of us continue to give more attention to home, contents and car insurance than protecting mortgage repayments.
Source data:
[1] 40% said they give a lot of attention to home, contents and car insurance; 31% said protecting their mortgage repayments was important.