Could you pay the bills if you could no longer work?

Six in ten people in the UK would run out of savings within six months if they were unable to work, according to a study.

Around one in ten said they would manage less than a month according to the research by Scottish Widows. 

Despite a 7% increase over the past 12 months in the average amount people are saving, fewer than one in twenty (4%) have income protection cover.

Awareness and prioritisation

The research highlighted the existing gap between awareness and prioritisation for this type of insurance, with more than 80% of the 5,000 people polled saying they have heard of life insurance, income protection and critical illness cover, while the figures plummet to less than one in ten (8%) who have a critical illness policy, compared with almost half (48%) who have taken out home insurance.

This disparity raises concerns over UK households’ financial resilience, as one in seven have been affected by critical illness, and more than a third (37%) rely on two incomes.

Out of those affected by critical illness, 42% said they had to make lifestyle changes in order to cope with the financial impact, while only one in twenty had a policy in place.

Protecting yourself

Allan Gardner, Financial Services Director at Aberdein Considine, said the cost of a protection policy is often small compared to the financial security on offer.

He said: "Regardless of whether you have children or other dependants or not, if illness would mean you couldn’t pay the bills, you should consider income protection insurance. You’re most likely to need it if you’re self-employed or employed and you don’t have sick pay to fall back on.