Less than a month to hardship for over six million households
- More than a fifth (22 per cent) of households would not last a month before getting into financial difficulties if the main breadwinner was unable to work
- A quarter of households (25 per cent) do not have any savings at all
- Almost a third (32 per cent) have stopped adding to their savings due the rising cost of living
More than a fifth of households (22 per cent) would only be able to last a month before facing financial hardship, if the main breadwinner became seriously ill and was unable to work, according to new research from Direct Line Life Insurance1. This is equivalent to 6.3 million households across the UK2.
With household bills and the overall cost of living rising, over half of households (55 per cent) would run into financial difficulties within a year. While many are still suffering from record-breaking levels of inflation, reaching 11.1% in October 2022, the outlook for 2023 confirms the cost of living crisis will continue to threaten the stability of household finances3.
A quarter of households (25 per cent) do not have savings in place for emergencies and even amongst those with a savings pot, almost half (47 per cent) have stopped adding to it because of the current challenges facing households. Of those without savings, two thirds (66 per cent) would fall into financial difficulties within 12 months if the main breadwinner was unable to work.
Having a financial safety net is incredibly important, as analysis reveals the number of adults without jobs due to long-term illnesses is rising, from around 2.0 million people in the spring of 2019 to approximately 2.5 million in the summer of 20224. It is important people recognise that it is not just unemployment that poses a risk to their earning potential, but also long-term sickness.
Vincent Guadagnino, Communications Manager at Direct Line Life Insurance, commented: “Millions of households would be in an incredibly vulnerable position if the main householder 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 per cent 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.”
ENDS
Notes to Editor
1 Research conducted by Opinium between 26/08/22 and 30/08/22 polling 2000 UK adults
2 3.3 million households - based on 22% of the 28.1 million households in the UK (source: https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2021)
3 Consumer Price Inflation, 2022 - https://www.gov.uk/government/statistics/consumer-price-inflation-uk-november-2022-time-series
4 Office of National Statistics, 2022 - Half a million more people are out of the labour force because of long-term sickness - Office for National Statistics (ons.gov.uk)
For further information please contact:
Ewan Robertson
Head of News and Issues – Direct Line
Email: ewan.robertson@directlinegroup.co.uk
Edelman Smithfield
Direct Line
Started in 1985, Direct Line became the first UK insurance company to use the telephone as its main channel of communication. It provides motor, home, travel, pet and life insurance cover direct to customers by phone or on-line.
Direct Line life insurance policies are underwritten by AIG, part of the American International Group UK Limited, registered office: The AIG Building, 58 Fenchurch Street, London EC3M 4AB. American International Group UK Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority (FRN number 781109. You can check the FCA register at www.fca.org.uk/register or call the FCA on 0800 111 6768.
Customers can find out more about Direct Line products or get a quote by calling 0800 077 8297 or visiting www.directline.com/life-cover.