Workers skimp on back-up cash
THE SENTINEL - 20TH NOVEMBER 2002
British staff unprepared for loss of jobs.
Almost half of all Britons would not have adequate financial back-up if they lost their job, according to an alarming new survey.
Large gaps have been found in the nation’s finances, with around one third of respondents saying they would rely on state social security benefits if they were unable to find work.
Those in the Midlands and Wales came out worst in the survey of 1,000 adults by insurer Scottish Provident, with the Scots better prepared than most.
Only 37 per cent of those in the Midlands said they would be able to cope if the main wage earner had to give up work through major illness or accident.
“Whatever causes you to lose your income – sickness or redundancy – the bills won’t stop. Most people are aware of the dangers but are doing little to prepare,” says Nick Kirwan, head of marketing and product development at Scottish Provident.
Social security benefits are paid depending on individual circumstances but currently Jobseekers Allowance is just £53.95 a week. And incapacity benefit is not much better, starting at around £70 for long-term illness or disability.
“The statistics are worrying,” says Mr Kirwan. “People are very aware of the risks of unemployment or long-term illness, yet they’re still not making adequate provision to protect themselves.”
“We found a lot of contradictions in the report. For example, many households were aware of how little they would receive from the state. Yet despite this, most have not thought about how they would supplement that income.”
If you haven’t got spare cash to save for a rainy day, some kind of income ort mortgage payment protection insurance cover could ease the pain if disaster strikes.
Policies such as accident, sickness and unemployment insurance and mortgage payment protection insurance pay out a percentage of your monthly mortgage payments or income, typically for up to 12 months, should you be unable to work.
For mortgage payment protection insurance, policy costs vary from between £4.50 to £5.50 per £100 of cover. You can choose whether payments start one month, three or even six months after losing your job and you can choose the proportion of your monthly payments covered – typically up to 75 per cent.
For a male aged 30 requiring £810 a month to cover mortgage and bill payments, the monthly premium would start at £36.45 with an excess of 30 days, with Burgesses Shelter accident, sickness and unemployment cover. Online provider protectyourearnings.co.uk also has cover starting at £36.45 but with a 60-day excess. Both policies pay out the benefit for a maximum of 12 months.
