The average UK household would run out of money in just 14 days, if a wage earner was hit by critical illness or died.
This is because nearly two thirds (63%) of UK households have neither critical illness insurance nor life insurance, according to insurance giant Aviva*.
One family in 4 could raise only £100 of disposable income during the first week after the loss of an income, while the average weekly outgoings for a UK household is £471, Aviva said.
While 47% of people say they would use their savings in the event of an illness, 16% of people state they would be forced to sell their TV to raise money, if they had to give up work.
The facts are more shocking when you consider that 1 in 4 men and 1 in 5 women will have to give up work due to critical illness before retirement. The average age for critical illness claims, according to insurer Legal & General, is just 45. The most common illness behind insurance claims is cancer, which will affect 1 in 3 of us during our lifetime.
One hidden consequence of critical illness is that the healthy spouse may have to give up work as well, in order to care for the other. A family can find themselves quickly reduced from having two substantial incomes to living on benefits, as unexpected medical costs mount up and the costs of a mortgage, running the home, and children’s education continue as normal.
Many are unaware of the reality of state support in a critical illness situation. The Government Employment and Support Allowance provides just £95.15 per week to an individual who falls ill.
Aviva reveals that 31% of UK households rely on a sole breadwinner.
The average payout on an Aviva critical illness insurance is a tax-free lump sum payment of £78,707, the company said.
*Source: Aviva internal research + Opinion Matters poll of 1,008 UK residents aged 16-80, Jan 2010
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