Almost 70% of Irish consumers have experienced a drop in
household income over the past 12 months. 40% of consumers say that mortgage
repayments are their biggest financial concern, while a startling 45% fear that
they or their partner could be at risk of losing their jobs in the next twelve
months, according to research carried out by Friends First.
These changed financial circumstances are forcing people to
re-examine household budgets and to make significant adjustments. People are
examining personal balance sheets carefully and while many people have opted to
reduced ‘luxury’ expenditure others are reducing their level of insurance
cover. 13% of respondents to the Friends First Income Protection survey say
that they have cancelled insurance policies in the past 12 months, as a result
of reduced income.
Despite these financial concerns there is significant uncertainty
among consumers around what state benefits they are entitled to in the event of
long term illness or disability, however a startling 27% of those surveyed said
if they were unable to work, due to illness or disability for a long period,
they would be have to rely on government disability allowance which would
entitle them to a payment of between €196.00 and €201.50 per week. *
While three quarters of those surveyed were aware of what
income protection is and 69% of those surveyed thought that long term
disability would cause them more financial hardship than the death of an income
earner, less than 9% of people surveyed had an income protection policy.
-
78% have car insurance
- 63% have health insurance
-
56% have house insurance
-
43% have life assurance
-
30% have mortgage protection
- 18% have
critical/serious illness insurance
-
9% have income protection
-
10% have none of these
However in a separate piece of research carried out with
Friends First Income Protection claimants, 32% of claimants say that their
income protection policy is the most important policy that they have in place,
followed by health insurance at 24%. Friends First has a high claims payment
record and has honored approx. 85 – 90% of claims registered in the last five
years.
Commenting on the survey findings, Eamonn Twomey, Head of
Marketing, Friends First said: “The
results of this research are quite alarming, it is clear that many families are
concerned about loss of income through unemployment or illness and yet despite
such concerns, there is very poor awareness among the greater population as to
what their state entitlements are in the event of illness and how they can
protect themselves financially in the event of
one or other income earner having to leave the workforce as a result of
illness .
“People do not fully
realise that unless they have Income Protection cover through an individual or
group policy, if they have to leave the workforce for a prolonged period due to
illness, they will have to rely on the social welfare system which will entitle
them to a payment of approx. €10,000 a year. (€196 a week). Also, self employed
people are not entitled to any state support in the event that they are unable
to work so they really do need to protect their livelihood. Income protection
offers a replacement salary of up to 75% of your income if you are unable to
work due to illness, injury, accident or disability.”
Friends First, the market leader in the income protection
market, has paid over €20 million in disability claims in 2009 and over €60
million in the last five years.
The average claim per annum is approx. €20,000 while
60% of claimants are aged between 45 and 65 years of age.
