Unprotected: 65% of consumers are exposed to unexpected financial shocks

A new survey released by the Money Advice Service has found that 32% of UK adults have experienced a seriously adverse financial event in the last five years. This includes job losses and serious illness or injury. Only 35% of these unfortunate people had the right insurance in place to cushion the blow.

As a nation, we are largely unprepared for financial emergencies. Many of us say or think we have emergency savings, for example, but over 35% of us have no savings at all and in total about half of us have less than £500 put away in an emergency fund.

Some more statistics…

• 18% of adults know someone whose life was severely impacted because they had no protection insurance in place
• 17% of adults consider protection insurance to be a necessity
• 67% of people say that they have dependents (children, partner, elderly parents)
• Only 8% of people say they aren’t concerned about what happens to their family’s finances after they are gone

So, what are your options?

To guard against life’s occasional knocks, we should all try to save up some money that we can easily access in emergencies, and keep consumer debts low. Traditionally we’ve been told to save either 3-6 months of take home pay, or 3-6 months of basic household outgoings. However, any amount is helpful, and even £500 could make a real difference in the short term.

Depending upon your personal circumstances, you might also wish to consider taking out some protection insurance, which could include:

• Life insurance
• Income protection insurance (and short term income protection insurance)
• Critical illness cover

For example, depending upon your particular requirements, a lot of life insurance has prices starting from as little as £10 per month.

We’re often squeamish when it comes to thinking about events such as job losses, injury, illness and death, but maybe we should be planning better for the worst as well as hoping for the best.

For more information, there’s a press release on the MAS site.

How are you covered against financial emergencies? What do you think about emergency funds or protection insurance?