How does Income Protection help support financial resilience?
The research by Scottish Widows found that 30% of adults have taken an extended period out of work due to illness or injury, and that the average length of an extended period off work is 22 weeks – or approximately five months. However, many people are unclear about what they would be entitled to receive from their employer if they were off sick for this long. In fact, 29% of UK adults didn’t receive any support from their employer during their sickness. This increased to 33% for women and 40% for adults aged 45 to 54.
It’s crucial that anyone who does experience a period of difficulty is able to maintain their lifestyle so that they’re not having to worry about rebuilding and can put their energy and focus into getting better.
However, on average, people would only be able to support themselves at their current living standard for 77 days if they were unable to work, well below the 22 weeks. Any longer than that and they would need to dip into savings (34%), seek the support of loved ones (23%) or take out a loan to cover living costs if they were out of work for a prolonged period, all of which could compound their vulnerability.
The survey found that the top financial concerns of UK adults if they were unable to work due to illness were the burden of monthly bills (51%), keeping a roof over heads (38%) and being able to provide for loved ones (26%).
These concerns are particularly prevalent among those in their 40s and 50s who are often navigating higher outgoings and more complex financial responsibilities, making them more susceptible to any dips in income. Income protection can help to cover these costs and give customers peace of mind.
What’s stopping people taking out Income Protection?
The main barrier to Income Protection seems to be, simply, lack of awareness. According to the Scottish Widows survey, 15% of people have never heard of protection products before. Of those who don’t have it, 28% have never thought about needing it.
For those who have taken it out, 24% said that it was having children that prompted the decision, and for 19% it was when they bought a property. However, 87% of mortgage holders don’t have Income Protection, and 20% of private renters would struggle within a month of income loss. Given the already perilous state of the housing market, and with 1.5 million households in Great Britan currently on waiting lists for social housing, making sure that people have the means to support themselves through a turbulent period is crucial.
Our Income Protection cover
To tackle this growing problem and help give our customers peace of mind that their future is secure, Scottish Widows launched a simple to understand Income Protection cover. This can be a complex area, so the aim of our new product is to make it easier for advisers to provide tailored protection to reduce their clients’ financial risk if they are unable to work due to illness or injury.
Since everyone's needs are different, this product is tailored to individual requirements and available through advisers. Our income protection gives the customer choice with an option of full-term cover or a 2-year cover and deferred periods of four to 52 weeks. Fracture cover is included as standard.
