Brits consider an internet connection and mobile phones to be greater financial priorities than protecting mortgages and incomes, according to new research in the latest Scottish Widows Protection Report. 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 10 (80%) who considered broadband and mobile phones (71%) essential for daily living.
Meanwhile, just over a quarter (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 (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 10 (8%) have critical illness cover and fewer than one in 20 (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 (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. 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 10 (8%) would claim on an insurance policy, and a quarter don’t know how they would cope.
Esther Dijkstra, protection expert at Scottish Widows, commenting on the findings, said:
“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 of us continue to give more attention to home, contents and car insurance than protecting mortgage repayments. Although the here and now tends 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 have invested throughout our working lives and for the future.”