A recent survey carried out by a leading financial institution has highlighted the value of income protection insurance for homeowners, revealing that 31 per cent of households have less than €250 set aside as a financial safety net.
The results of this research fly in the face of the recommended minimum ‘salary cushion’, which prescribes that householders should have at least three months’ average take-home pay, which is currently amounts to €5,756.20.The survey of over 1,000 households has also revealed that just under a fifth (19 per cent) have no savings at all, whilst 12 per cent have less than €250. When stacked against a typical household’s average monthly outgoings, currently €1,669, these savings would last for just five days.
The research also revealed the demographics who are least financially prepared if they were unable to work due to ill health or accidental injury are the 16 to 24 and 35 to 44 age groups. 46 per cent of the youngest age group has less than €250 in savings, whilst 42 per cent of 35 to 44 year olds find themselves in the same position.
In terms of gender, women are less prepared than men, with 21 per cent admitting to having no savings at all, whilst 13 per cent have less than €250 set aside. This compares to 16 per cent and 10 per cent of men respectively.
The value of products like income protection insurance has been highlighted by the fact that over a quarter of those people surveyed said they would be unable to cover their rent or mortgage payments for even a month if they were to lose their main source of income.The survey asked householders how they would cover their essential monthly expenses if they could no longer work. The results are listed below:
- – 40 per cent would use their savings;
- – 30 per cent would apply for benefits;
- – 14 per cent would use their income protection insurance;
- – 13 per cent would expect their partner or family to cover their costs;
- – 11 per cent would use a personal loan or credit card.
These findings have prompted financial experts to advise people to put away a small amount of money aside each month to build up an emergency pot, or to take precautions such as income protection insurance, which helps people to cope financially if they can’t work due to ill health or injury.
For further information about income protection insurance, please call our experienced advisers on 1890 917 917.