A fifth of households on the brink of financial hardship
More than one in five (22%) households would not last a month before getting into financial difficulties if the main breadwinner was unable to work, according to Direct Line Insurance.
Research by the insurer found that a quarter (25%) of households don’t have any savings at all, while 47% of those that do have savings have stopped adding to them during the cost-of-living crisis.
The study also found that more than half (55%) of households would run into financial difficulties within a year if the main breadwinner became ill and couldn’t work.
Of those without savings, two thirds (66%) would fall into financial difficulties within 12 months if the main breadwinner was unable to work.
With household bills and the overall cost of living rising, Direct Line said the stability of household finances will continue to be threatened in 2023.
According to Direct Line, the number of adults without jobs due to long-term illnesses is rising, from about two million people in the spring of 2019 to approximately 2.5 million in the summer of 2022.
Vincent Guadagnino, communications manager at Direct Line Life Insurance, said: “Millions of households would be in an incredibly vulnerable position if the main household earner was to find themselves out of employment, with the impact felt in an incredibly short amount of time. For many households the impact wouldn’t be measured on months but just a few short weeks.”
“It is important households consider what safety nets are available and if they can reorganise their finances to provide increased protection should the worst happen.
“For example, we know that only 35% of people have life insurance, even though our research shows most people see the benefits of having this cover in place. Life insurance with critical illness cover can help families to cope by paying out a lump sum if the policyholder is diagnosed with certain serious medical conditions.
“Many families see January as an opportunity to budget for the year ahead; particularly in these difficult economic times, we would encourage people to review their finances carefully and consider what cover, if any, is right for them.”