Friends First urge people to consider income protection
New statistics from Friends First has found that only 43% of employees see their salary as a top financial asset. From those surveyed, when asked to rank their financial assets in order of importance, their salary was ranked fourth in line after their home (67%), savings (57%) and pension (48%).
Commenting on the findings, Karen Gallagher, Protection Director with Friends First said: “The findings unearthed in this research are quite striking particularly in relation to how people view their assets. They show that when people think of assets they think of homes, savings and pension, yet their salary comes in at fourth position. The fact is that, generally speaking, without their income they would have none of those assets. Life is full of twists and turns and securing your income is the only way to ensure a sustainable financial future in the event of your income stream being disrupted for whatever reason. People insure their house, and yet they don’t think of insuring their income. The one thing that pays for everything.”
The research also highlighted that the majority of those in employment have heard of income protection (80%). This is significantly higher amongst those people who have a pension. However a fifth of workers have never heard of income protection.
How long could you cope without an income?
Of those aware of income protection, the majority (60%) of those surveyed perceived it to be relevant to them. However, fewer self-employed people deemed it relevant when compared to employed people (57% and 63% respectively), despite not being entitled to access social protection payments in the case of illness.
When workers who considered income protection relevant to them were asked how long they could cope without their income, 44% said for 3-6 months, 30% said 6 months to a year, while less than one in ten (8%) suggested they could sustain themselves financially for two years or more. 15% said they didn’t know, while only 3% said they could cope without their income until they got better. The average income protection claim lasts 5 years, which represents a potentially very large gap in a person’s finances.
Protecting your income
When this group was asked about an appropriate amount of income to protect, two thirds (66%) agreed 51-75% of their income would be sufficient. Just over a quarter (27%) felt between 25-50% would be appropriate and the remaining (7%) thought under 25% of their income would suffice. Interestingly, those who were full-time employed deemed it important to protect more of their income than those who were self-employed with almost seven in ten (69%) saying they would protect between 51-75% of income compared to a smaller percentage of 57% of those self-employed.
“Medium to long term absence from work either through illness or injury is a situation that many of us could face during our lifetime. Such a disruption in your income stream can have a long term impact and so it is important to safeguard that income stream to ensure you have the financial support required to alleviate any unnecessary stress during what can already be a difficult and anxious time,” concluded Ms. Gallagher.
Friends First has been providing income protection for over 50 years in Ireland. Income Protection can provide customers with up to 75% of their normal income when they are off work due to illness or injury – helping to cover regular expenditure and ensure minimal lifestyle changes for customers and their families.