Research suggests people still mistakenly think cover is too expensive
People are increasingly aware about their financial situation, but are still too willing to rack up significant levels of debt without having adequate protection to cover them should they fall ill, it was claimed today.
Research carried out among over 2,000 people show that most individuals only consider themselves in serious financial difficulty once they are in £14,416 of debt.
And while that figure is down from a year ago, suggesting individuals are more conscious of their financial situation, it is still a significant burden to take on without proper protection cover, according to Bright Grey, the insurer behind the study.
The provider’s “financial safety net” report for 2011 states that the level of “serious financial difficulty” for individuals is £1,421 less than it was last year, when it stood at £15,837.
Research carried out recently for Legal & General shows that the number of households who say they are "struggling" to pay bills or sinking into debt has fallen by just under a quarter of a million (244,000) at the start of the year compared to the last quarter of 2011.
But Roger Edwards, proposition director at Bright Grey, said that individuals are in fact becoming increasingly conscious about the impact of rising unemployment. Two in five (40%) of individuals surveyed for Bright Grey cite losing their jobs and being unable to find another one as the biggest thing likely to affect their standard of living this year. A rise in the rate of inflation (32%) was seen as having a far more dramatic impact on living standards than a rise in interest rates (15%).
And while “getting a serious illness” was ranked as the second main factor to affect living standards in 2012, not enough people have contingency plans in place to cover, Edwards said.
He said: “People are becoming increasingly aware of the impact of high debt yet are still failing take out adequate protection. Britons need to make financial provisions for their future and not live under the hope that state benefits or bail outs from family and friends will allow them to maintain their standard of living. Protection products are cheaper than ever and it is crucial that people recognise the significance of putting an appropriate financial safety net in place.”
The main reason cited by survey respondents for not having a protection product was the cost. Almost half (46%) of people suggested that protection products were too expensive compared to 39% last year. One in five people (19%) said the products were unnecessary as they could rely on savings, while over one in ten (11%) said they would prefer to spend the money on other things.