A recent survey found that 46% of respondents without income protection would not be able to pay their mortgage or rental payments if they lost their income.
The survey, conducted by insurance group Canada Life with the results published at EmployeeBenefits.co.uk in June 2016, asked 1,004 UK employees about income protection. Of those who do not have it, 44% said that they would rely on their savings for living expenses. With an average total of £8,849 saved, most of these people would run out of money within a few months.
Around 43% of people without mortgage protection said they would need state benefits to live on, while 9% believed they would be able to live off state benefits in the event of losing their income, so were not overly concerned about the possibility of losing their income. However, many overestimated how much they would receive in benefits.
Perhaps the most alarming result of the survey was that nearly half (46%) said that if they had to rely on state benefits, they would not be able to pay their mortgage.
People with long-term illness, or who cannot work for a lengthy period of time after an accident, risk losing their home, as state benefits and savings cannot be relied upon to pay the mortgage.
Income protection insurance protects employees if they cannot to work due to illness or an accident. Mortgage protection insurance usually pays the mortgage for up to two years or until the borrower returns to work.