Protecting your financial needs

Nearly a quarter of people have no idea how they would cope should they lose their regular income, according to research commissioned by the ABI.

Insurance can, however, play an important role in helping people to meet their financial commitments.

Statistics show that 23% of people will be jobless at some point during their working life. While unemployment is often short-term, more than one in three will be out of work for a year or more. With so many people juggling their debts to keep afloat financially, and with families relying on two incomes to get by, a period of unemployment often has a devastating effect on people’s finances. An economic downturn is likely to make the situation worse as more people would be affected and those that are, could take longer to get back to work.

Being out of work through illness can have even worse financial consequences. There are currently 2.4 million people in the UK with long-term illnesses who claim incapacity benefit.

The ABI has produced a factsheet highlighting the different types of protection products available that people can consider.

Nick Starling, the ABI’s Director of General Insurance and Health said: “It is important when people are taking out a loan or a mortgage that they think about how they would meet repayments should they fall ill or become unemployed. Insurance can play a role in helping people meet their financial obligations in these circumstances.

“Buying the right insurance is essential. Don’t just pick the first one you look at, or the cheapest, but shop around to make sure it’s the right policy for your needs. Most people only think about buying insurance when they buy a house, take out a loan or start a family, so looking into insurance options before you make any big purchases is a good idea.”