Press articles highlighting statistics about the financial state of the nation never make pleasant reading, especially when you’re sitting down to your bowl of cornflakes first thing in the morning.Now, research from Scottish Widows alarmingly reveals just how much of a financial crisis the nation is facing. Allowing for state benefits and the cover people already have in place, the average UK household needs to take out an extra 42,000 worth of cover to protect dependants, and 52,000 in the event of surviving a long-term illness. This confirms that too many people are still burying their heads in the sand when it comes to protecting their own and their family’s financial futures. The risks of them not taking action are also becoming greater and more complex. There is a real need for something to be done. The mounting number of social and economic changes we have seen in recent years means that people need protection now more than ever. Welfare reform surrounding incapacity benefit entitlement and significant adjustments in the role of employers means people need to take more responsibility in managing the growing risks they face. Yet survey findings indicate that many consumers are either unaware of or are not facing up to these changes. Worryingly, 29% think that they can rely on the state to provide for them if they are unable to work due to critical illness, accident or disability. A further 38% envisage themselves falling back on their savings. But neither option is likely to fund the kind of lifestyles we lead nowadays, especially when over half of us have the equivalent of less than two months’ salary in savings to fall back on and 27% have no savings at all. As we know, shifting patterns in health mean that many of us are living longer than ever before, and we are more likely to suffer a serious illness than to die young. But only 22% of people have critical illness cover. It might be right to assume that some people don’t understand the impact a critical illness could have on their lives, or think that if it does happen to them they will muddle through somehow. But they should not have to, and we providers and advisers must continue to highlight the need for and the benefits of having this type of cover. I wonder, given all the negative press coverage surrounding declined claims, could another catalyst be a lack of consumer trust? I suppose you can’t blame people for having some degree of scepticism when most claims reported on in the media are those which are declined. The message ab-out the need for protection is still not getting through to the public. When looking at the top 10 things the population insures, it can be seen that only 13% insure their health whereas 22% insure their holidays. Again, is this down to a lack of understanding or is protection just not a financial priority? We have an opportunity, and arguably a responsibility, to educate people and raise awareness of the need. If we don’t do this the consequences will be far reaching for society and the industry, and the sales of some products will continue to decline.
The truth is that the population of this country is getting worse not better when it comes to looking after their personal finances.