According to a major study of 11 countries by Smith School of Enterprise and Environment at Oxford University, the UK is lagging behind when it comes to the number of income protection policies in place and perceptions about income protection.
Of the 11 major countries surveyed, the UK is 10th on the list for the number of people with an income protection policy. We are also 10th on the list for how many people would consider buying income protection insurance and 10th for willingness to pay for income protection. However, when asked about our perception of our social safety net, the UK ranked 6th on the list, suggesting that we perceive the government will step in and provide us with some social aid in times of hardship.
The income protection gap refers to the ability to maintain one’s living standards when circumstances change, like the loss of employment. The “gap” is the shortfall in savings or provisions that individuals have, to help them through difficult periods when there is loss of employment, or illness preventing work.
The research also suggests that perception of income protection insurance is heavily influenced by the experience that individuals have had personally themselves, or have witnessed through friends or family.
The report also found that income levels are impacted dramatically by changes in personal circumstances, such as the death of a relative or spouse, with households falling in to poverty in some circumstances.
A range of issues are discussed in the report, citing why people are put off from buying income protection, with many stating that they don’t have dependants who would benefit and lack trust in insurance providers to provide payments when claims would need to be made.
If you would like to discuss protecting yourself should you find yourself out of work or unable to work due to illness, contact the team on 01604 877999.