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Job loss would spell financial disaster for one in three

17th December 2008 Print
Nearly a third of adults would face financial disaster within two months if they lost their jobs, according to research for

Around 30 per cent of people fear they would be unable to meet repayment commitments on personal debts including mortgages, loans and credit cards, the independent financial comparison website warns. Half of them - 15 per cent - believe they would only last a month.

But despite the worries of rising unemployment in 2009 as the economic recession continues to threaten jobs, the research reveals low levels of take-up of payment protection insurance which will cover repayments in the event of unemployment.

Just 26 per cent of people with personal loans have payment protection insurance while 37 per cent of those with mortgages are covered. Only 16 per cent of credit card customers are insured. believes criticism of payment protection insurance in investigations of the industry by the Competition Commission and the poor reputation of some providers in not paying out claims has led to a low take-up.

But its research shows that the average amounts owed on loans and credit cards are not trivial - the average card customer owes £2,007 while on personal loans it is £9,465.

Sean Gardner, Director of, said: "Hoping for the best is not much of a financial strategy when the going gets tough and it is worrying that so many people are literally on the brink of financial meltdown if they were to lose their job.

"Being in debt is sustainable if you have an income and a means of paying off loans and credit cards. Payment protection insurance and particularly mortgage payment protection insurance can be vital if you lose your job. But sales of PPI are dropping at a time when providers are experiencing record claim levels.

"The financial services industry is partly to blame for giving payment protection insurance a bad name. But there are good deals out there with signs that some providers are offering much improved products. Unsurprisingly some lenders may be more nervous to offer credit if the borrower has no protection in place."