Nearly half (24 million) of people in the UK have no insurance in place to cover loss of income through illness or death of a breadwinner, according to The Protection Oversight research undertaken on behalf of Friends Provident by 72 Point.
Even those that have considered taking some action would be underinsured by an average of £14,500 per year.
Alarmingly, the report showed that a third of people think they could live on less than 35 per cent of their take home pay if they were unable to work through illness or injury.
Based on an average weekly income of £489, that means they would have a maximum income of £171 per week, a massive £300 less than the current average weekly household expenditure of £471, and not enough to survive on especially if there is only one breadwinner in the household.
Of those who have insurance policies in place, over half (53 per cent) have no idea how much they would receive if they were to make a claim.
Friends Provident says this suggests the policies they have may no longer be adequate if their circumstances have changed, for example, their salary has increased, or they have married or had children since taking out the policy.
"Imagine being told that you had just been given a 66 per cent cut in your income - the impact of that for most people would be catastrophic,” said Ed Stuart-Brown, head of protection sales at Friends Provident
“It's time people took control of their future and looked at this in a responsible way, instead of burying their heads in the sand, especially in today's environment. Ignorance is not bliss, it's irresponsible.
"It's a sad fact of life that the unthinkable can - and does - happen and the last thing you would want is to leave yourself or your family in dire financial straits.
I would also urge those who do have cover to dig out their policies and review their level of cover to ensure they have made adequate provisions should the unexpected happen. Unfortunately it's too late to do anything about it once illness, accident or death occurs.
“If you are fit and well now is the time to act; the cost for most people is a fraction of the potential benefits they could receive and it's a simple matter to review your needs with your adviser."
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