Could you and your family survive if you lost one of your sources of income? If the answer is ‘no’, you are not alone. New research from a leading life insurance company has found that half of families in the UK would struggle to support their family after losing one of their main sources of income.
Without the safety net of life insurance, millions of households in the UK would struggle to make ends meet if their income decreased. Keep reading to find out more.
Two thirds of people would have to use savings to make ends meet
A survey for AA Life Insurance found that half of families would struggle to pay for essentials if they lost their main source of income. More than two thirds of those questioned said they would have to use their savings to make ends meet while 17 per cent would be reliant on a credit card – a figure that rises to 41 per cent of those aged under 35.
More than half of respondents said they would find it difficult to pay to run their car while half said they would find their utility bills the most difficult to pay. A further 43 per cent admit that paying for regular household bills would be difficult, and worryingly, 36 per cent would find it difficult to pay their rent or mortgage and a quarter wouldn’t be able to afford groceries.
The survey also found that the majority of people would also find it hard to meet the cost of other outgoings such as holidays, home improvements and car repairs.
The aim of the survey was to draw attention to the problems that millions of families would face if their lost their main source of income and how households can take steps to protect themselves. We look at this next.
Life insurance can provide the peace of mind of financial support
The survey found that almost four in five people (78 per cent) have savings that they could use in an emergency. The average respondent had savings of £9,359 and while this could help in the short term it may not be enough to last indefinitely.
Mark Huggins, director of AA Life Insurance, commented: “It’s always wise to have a financial safety net, so it’s good to see that so many people are saving. But figures suggest that the average weekly spend of a British family is £517, which would mean that a family with savings of around £9,000 could see them disappear in around 18 weeks.
“The thought of relying on a lower or no income at all can be daunting, especially if there are children or other dependents to think about. I think most people recognise that having a financial plan in place in case something happens to the main breadwinner is a wise thing to do, yet many people understandably find it a difficult topic to broach with their family. But if the worst happens, life insurance can provide a vital lifeline.”
Having life insurance in place can give you the peace of mind that there would be a lump sum available to replace lost income. It can be used to help you and your family meet your monthly commitments – utility bills, council tax etc – or could allow you to pay off your mortgage, leaving you safe in the knowledge that you own your home.
Experts also draw attention to other financial protection products which can help to provide support in the event of a loss of income. Critical illness cover and income protection are designed to provide financial support should you be diagnosed with a serious illness or suffer from long-term ill health, either in the form of a lump sum (critical illness) or a regular payment (income protection).