Around 71% of adults said they had never looked at income protection despite the vast majority saying they would struggle financially if they did not work.
According to research from Aviva for Income Protection Awareness Week, approximately 67% of adults say they would financially struggle if they could not work due to long-term illness.
Just under half – 47% – of people said they would rely on savings to cover living costs if they couldn’t work due to long-term sickness, 44% said they would cut back on non-essential spending and a third would control their spending by using cheaper brands.
Two in five said they would find money from elsewhere – either from borrowing from friends or family (17%), relying on someone else to pay (17%), or taking out a bank loan (6%).
Almost a third said they would rely on state benefits.
Around a fifth said they had never heard of income protection, and this goes up to a quarter among the Gen Z demographic.
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Income protection barriers are perceived cost and lack of awareness
The research said there were two barriers to buying income protection – perceived cost and lack of awareness.
More than a quarter said they did not think they could afford a product and a similar number said they didn’t think they needed it.
Over a quarter said they may look at income protection in the future and less than a third said they would never consider taking out the product.
Approximately 36% said they would consider buying income protection when they were buying a home, but only 9% would consider the product if they were moving into a rental property.
Aviva said that this highlights the “opportunity to raise awareness of the importance of having financial protection for your housing costs – whether you own your home or not”.
Daren Boys, protection portfolio distribution director at Aviva, said: “Our research confirms that most people recognise that they’d struggle financially if they were unable to work due to ill health. However, there’s still a heavy reliance on savings or family members to cover their living costs.
“Income protection provides a much-needed safety net. However, Aviva’s research confirms that lack of awareness continues to be a key barrier to income protection sales. Although people are more likely to consider income protection when they buy a house, very few people would think about taking out an income protection policy when they move into a rental property.
“There’s a real opportunity for advisers to help explain the benefits of income protection for those who are renting. This can open the door to starting conversations about income protection with the younger generations now, rather than needing to wait until individuals reach traditional milestones like buying a house.”
