Do you really need Income Protection?

Submitted by Dave Collinge on 25/07/16 - 2:19 pm

Well according to a new report come out from one of the UK’s largest insurance companies Liverpool Victoria it would only take less than six days for a UK household to fall into panic if the primary homemaker was unable to do their normal tasks, however, just seven per cent of homemakers actually have income protection insurance.

In spite of working much longer hours than most people expect, housewives and househusbands are the happiest in their careers. Tasks like cooking, cleaning and childcare account for the majority of a homemaker’s time on a weekly basis.

While it can be difficult for homemakers to place a financial value on the work they do, the Office for National Statistics (ONS) recently released its Household Satellite Account (HHSA), which estimates the cost of unpaid work in UK homes.

The HHSA places the total value of unpaid work at home in the UK at just over £1 trillion in 2014. That is equivalent to £38,162 per UK household over the course of a year. This is important, says the ONS, because it highlights the value of all those chores and responsibilities that people choose to undertake themselves rather than pay someone else to do.

The LV poll found that homemakers said it would take less than six days (5.9) for their households to fall by the wayside if they could not carry out their regular tasks.

Almost a fifth of homes (19%) with a homemaker would have to fork out for childcare or a cleaner if their housewife or househusband was unable to carry out their duties. Over half (51%) would need to raid their savings to cover these additional costs, while one in 10 (10%) would rely on their credit cards to make ends meet.

In fact, families would only be able to manage, on average, for a period of 18 days before their savings ran out or they had to borrow money.

Myles Rix, Managing Director of Protection at LV=, said: “Despite being crucial to many households in the UK, very few families have protection in place that would allow them to pay for help if the homemaker was unable to do their day-to-day tasks.

“It makes sense to guard against unnecessary household stress by ensuring that both the breadwinner and homemaker are covered by income protection.”

Rix added that insurance advisers should encourage their clients to consider the value of both the breadwinner and the homemaker in their household financial calculations, and review whether they still don’t consider income protection to be a crucial safeguard.

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