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.

© Friends First, Friends First House, Cherrywood Business Park, Loughlinstown, Dublin 18