'Unprepared' nation highlights IP need

The potential value of income protection (IP) has been highlighted by research suggesting most Britons would suffer serious financial hardship if they were suddenly unable to work, Canada Life Group Insurance says.

The study also found three quarters of consumers would be unable to maintain their current lifestyle for over a year if they could not work.

Additionally, less than 10% of the 650 people surveyed would be able to fund their current lifestyle by using their individual income protection (IP) policy.

A further 5.6% would turn to a group income protection policy, it found. Yet, almost half of consumers confirmed they would rely on their savings alone.

Marion Ware, head of marketing at Canada Life Group Insurance, says: "The fact that nearly one in four consumers think they could survive for over a year on their current finances, when only 15% have any kind of income protection policy in place is very worrying."

Canada Life says considering the unstable economic environment, those relying on savings alone to fund their lifestyle could find their 'rainy day' pot is already stretched.

It believes the Employment and Support Allowance is set to be a lot stricter following the introduction of the Welfare Reform this month and its focus on fostering a 'return to work' culture.

Those applying for benefits could find it harder to meet the eligibility criteria and, combined with the recent unemployment situation, Canada Life Group Insurance says it is more important than ever for consumers to ensure they are fully protected should they be unable to work.

The average savings of those of working age is £4,954, derived from the average UK salary of £26,728, but it seems many could be underestimating their average living costs, Ware says.

"We urge all advisers to speak with their clients about income protection and discuss the importance of having this type of benefit available through the workplace>"