Just over 1 in 3 people (36%) believe they have provisions in place to cover monthly expenses should they fall ill or be unable to work for an extended period due to injury or illness, whilst the majority of workers (64%) have none. Of that 36%, sick pay from their employer is the most common provision amongst 64% of respondents who are working, followed by 42% who said that they have savings that they would use. Some 35% of workers who were surveyed have an income protection policy and 26% said they have specified illness cover, according to new research from Aviva Life & Pensions Ireland DAC (Aviva), one of Ireland’s leading insurers.
However, 2 out of 3 respondents (64%) admitted that they have made no provision as to how they would manage financially if they were unable to work for an extended period. While 52% of them admitted that they should consider putting plans in place but simply had not gotten around to it, 22% claimed that they did not think that there was any option available to them, presumably from an affordability perspective. Some 18% of those surveyed said that they don’t think about the ‘what ifs’, and 19% of those working said they expect that the State would support them if they were unable to work.
A key positive arising from the pandemic according to the research findings is that it has made workers give more consideration to their health and to how they would manage financially if they were to become ill, with over 70% of people saying that it has changed how they think. However, only 16% of people have taken action to address this as 43% of those surveyed have not done anything about it. Some 25% of respondents say they are definitely more aware of this but have yet to take action, with a further 15% having taken some action. Interestingly 17% of those working claimed to be more financially confident and 29% said they were less financially confident since the outbreak of Covid-19, with 54% of workers recording no change.
It is concerning to note that some 64% of people who are working have put no provision in place as to how they would cover their monthly expenditure if they could not work for an extended period due to illness or injury. Our claims statistics show that the average length of time that people claim for is five years. That’s a long time to be without an income if no provisions have been made in advance. Last year we paid out a total of €45 million to 2,000 customers claiming on their income protection policy with us and, the average age of customers claiming was 48 years and the youngest claimant was only in their early 20’s.Siocha Costello, Aviva
“Some 19% of those who have not made any provision cited that they would depend on the State to give them money. However, it is difficult to see how people will pay all their monthly expenditure if they are living on the State Disability benefit of €203 per week, particularly if they have a mortgage to pay, young children and other financial outgoings to pay for each month. This amount contrasts with our average weekly pay-out of €700 to customers with income protection claims. Our advice to people working with significant monthly outgoings is to consider the minimum amount they need each month to pay their rent or mortgage and household bills and seek to protect their income at that level. The good news is that income protection premiums qualify for tax relief at the individuals marginal tax rate when they take out a policy”, concluded Siocha Costello.