Why millions of us are walking a financial tightrope every day

Millions of Brits are putting themselves in financial danger due to a lack of insurance. Find out here why income protection can provide a safety net if you fall off the financial highwire…

Iona Bain

Thousands of Scots struggle to cope after losing their jobs or falling ill because they lack proper savings and insurance, research has revealed.

The Money Advice Service has warned that poor financial know-how and unwillingness to confront worst-case scenarios mean many households are just “one step away” from financial disaster should they lose their main source of income.

Official statistics released this week showed that the number of full-time employees in Scotland fell by 12,000 this summer. This puts the unemployment rate north of the border at 5.9 per cent, higher than the UK average of 5.5 per cent.

But MAS found that only 35 per cent of people had the right insurance policy to tide them over if they had to leave the workforce due to sickness or injury.

It also discovered that 28 per cent of consumers believe they cannot afford income protection policies, a vital means of replacing lost earnings.

A basic income protection policy typically costs £20 a month for a 30-year-old male non-smoker, paying out a monthly tax-free sum £1,500 for up to two years after four weeks of incapacity. But a quarter of households spend roughly the same amount each year on insuring their pets, according to research earlier this year from Drewberry Insurance.

Andy Webb, money expert at the Money Advice Service, says: “The research highlighted that there is a big gap between the number of people who experience financial shocks, and those that protect their lifestyles by either saving for a rainy day or considering the relevant protection insurance.

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