No Savings + No Insurance = Financial Disaster

Article published on 3rd August 2008

Continuing our series on the state of personal savings in Britain - or rather the lack thereof - in this article we will look at some of the findings of the Yorkshire Building Society (YBS) concerning the British aversion to income protection insurance and/or critical illness insurance, and over reliance on state benefits as a first line financial safety net

Up to 90% of British people do not have any personal income protection (whether that is in the form of income protection insurance, critical illness cover or payment protection insurance) and if faced with the possibility that they will be unable to work a further 68% either have no idea how they will be able to survive financially or have entirely unrealistic expectations about how they can continue to meet their weekly outgoings.

Although about one in five (around 21%) of those who responded to the question asked by Yorkshire Building Society admitted that they did not know how they would manage if they were unable to work, another 19% stated that they would simple manage on state benefits allowances. This may well be a false hope however, as the average weekly expenditure of the respondents came to £333.56, which, as the current state benefit stand at £75.40, this leaves a weekly shortfall of £258.16.

One in 20, or 5%, believe that they could sell their house if they needed to access money in a hurry. But as anyone who has tried to sell a house in the last couple of year can tell you, the housing market is virtually stagnant, with many people already having to contend with negative equity.

Relying on the equity locked into our homes is not a certain way of assuring our financial security should we be unable to work and face mounting debts. It's true that every wholly owned house or other property represents a good investment in the long term, we simply cannot rely on selling them or renting them out in and emergency if we need money quickly.

Sources:

http://www.silobreaker.com/DocumentReader.aspx?Item=5_883784459



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