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Rise in families without rainy day savings

UK families are saving less and forgoing vital insurance, leaving millions without a financial safety net, according to new research by Scottish Widows.



Thousands of families are jeopardising their financial futures by failing to save enough cash.

That is the conclusion of new research carried out by life insurance provider Scottish Widows.

The firm has found that the number of people in the UK who do not have any savings has risen to more than 9 million.

That represents roughly one in every five adults, and represents an increase of more than 10% on the previous year.

Decline in 'rainy day' saving

David Lascelles, savings expert at Scottish Widows, says: "It is concerning that despite economic improvements, the number of people who are able to set something aside for a rainy day is actually falling.

"The widening gap in fortunes between savers and non-savers highlights the impact that getting on the path to saving can have, even if it is just by putting aside a small amount every month."

The Scottish Widows report echoes findings from fellow insurer Legal & General that almost half of families have no insurance in place to cover eventualities such as redundancy, serious illness or even loss of life.

Lascelles adds: "Our research shows that many people are still only thinking in the short term.

Pressure to support relatives financially

"For instance, almost half of people said they prefer to spend their money rather than save, and almost two-thirds said they know they are not saving sufficiently for their long-term needs."

The company says that one of the biggest problems is that people in middle age in particular are under increasing pressure to offer financial support to both younger and older family members.

"We need to tackle this culture of short-termism and encourage people to adjust their priorities so they are thinking about protecting themselves for the future, and not just for the here and now," Lascelles says.

Financial safety net: Your options

Experts encourage people to consider protection insurance when others, for example a spouse or children, are reliant on their income.

  • Life insurance usually offers a payout if the policyholder dies within a certain term. This may be tied to the length of a mortgage or cover could last until children have finished higher education. The amount of cover you need depends on the size your family’s outgoings, but policies are available from just a few pounds a month.
  • Critical illness insurance pays out if the holder is diagnosed with any of a number of serious conditions, including cancer, heart disease or stroke. As the cover is broader than life insurance, premiums tend to be higher.
  • Income protection insurance pays a regular monthly income in the event that the policyholder can no longer work, either through redundancy or ill health. The size of the premiums depends on how soon the payouts start, how long they continue for, and how generous they are.

One potential pitfall of income protection cover is that the policy may only pay out if the customer is incapable of doing any work, rather than their own job.

Insurance pitfalls to watch out for

This type of "any occupation" clause means that, for example, a manual worker who suffered a broken leg may have a claim rejected if the insurer could argue that they would still be able to work at a desk.

Most people would be better off with "own occupation" income protection cover.

This means the policy will pay out if the holder can no longer do their existing job.

Insurer LV= has just announced that all income protection policies sold from now on will offer own occupation cover.

Spokesman Martin Sincup says: "Moving to own occupation cover makes it simpler for customers to understand when we will pay out and easier for customers to claim on."

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Chris Torney

Chris Torney

Chris is personal finance editor at the Daily Express. He's been a journalist for more than 10 years and contributes to a wide range of finance and business titles.Read more from Chris



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