Nation 'playing double jeopardy'

· Nearly half of UK households dependent on more than one salary

· 57% of our take home pay goes on essentials and yet only 43% of our income is protected against death or illness

· Only one in four believe they are adequately protected should they lose the main income from their household

· Over half of Brits have less than two month’s salary tucked away in savings=

The Scottish Widows Protection Report, reveals the nation is dramatically under-prepared for the loss of a breadwinner’s income – through either death or illness. The report – which will be repeated annually to track the nation’s protection shortfall – gives a stark assessment of financial pressures at play in Britain’s households today.

Half of all households dependent on two salaries
Despite the trend of women wanting to move back to being ‘stay at home’ mums, the report reveals this just isn’t possible for over 10 million households1 in the UK who are dependent on two or more salaries to maintain an acceptable standard of living. What is more, when it comes to married couples, and the 44% of Brits with dependent children, the perceived need for two salaries increases.


Commenting on the findings, Scottish Widows’ protection market director Nick Kirwan says: “Although the number of adults living on their own has doubled in the last three decades and the number of people having children is falling, almost half of households in the UK still have dependent children. At the same time, changing job patterns have seen millions of women enter the workplace and two-income households become the norm. This reliance on two incomes to buy and run the family home means millions of households are effectively doubling the risk of financial hardship should something go wrong.”

Over half our take home pay goes on essential living expenditure

The report also reveals that 57p out of every pound the average Briton takes home is now spent on essential expenditure – this includes mortgage repayments, managing debt, food, gas and electricity bills and council tax.


The report shows almost five out of 10 (47%) Brits have a mortgage, six out of 10 (60%) have secured or unsecured loans, overdrafts or finance agreements – and a similar number (63%) have credit card or store card debt. Those with children actually have higher levels of debt on both loans and credit cards than those without.


Commenting on the findings, Nick Kirwan says: “In an environment of low, stable interest rates the cost of borrowing has never been so low. In addition to this our survey shows over 95% of us also feel secure in our jobs. This combination of job security and the affordability of credit means that borrowing money is now more attractive than ever. The problem is that servicing this debt eats into our take home pay and exposes us to financial hardship should we be unable to work. Low inflation also means debts are eroded more slowly over time – again increasing the need for financial protection.”

At the same time as spending more on essentials – the average British household now has many more items to pay for that were once considered luxuries. The report reveals that in addition to paying off debts, owning and running a car and saving for retirement:

· 14.8 million households claim internet access/broadband is essential to the way they lead their lives

· 14.1 million households couldn’t live without their mobile phones

· One annual holiday is essential for 13.4 million households

· 5.6 million need to run two cars

· A cable/satellite television subscription is essential for 5.4 million

The average household expenditure – including essentials and luxuries – is £1882.406 a month or 97% of our take home pay

What would happen if something went wrong?

The alarming findings of the Scottish Widows Protection Report 2006 show that if a breadwinner becomes long term ill – or dies – the average household in the UK does not even have their essential expenditure covered – let alone enough money for those little luxuries.

With 57p in every pound of our take home pay being spent on essentials – the report reveals only 43p7 is protected against long term illness, and 35p7 against death. This means that the average household in the UK will find themselves in serious financial hardship in the event of the worst happening.

The report concludes that the average British household needs to have enough protection to last eight years in case of a serious illness and twelve years in case of the death of a breadwinner. It also reveals we typical have £98,000 in life cover and £80,000 in protection against long term illness.

Commenting on the findings, Nick Kirwan says: “The majority of the population is walking a financial high wire without a safety net. Nobody knows what is around the corner, but we have to accept that all too often illness does strike and accidents do happen. If people don’t start to take responsibility for their own financial futures then they could be left in a position where they can’t even cover the essential expenditure in their lives.”

Only one in four believe they are adequately protected

The report also shows that it is not through any lack of understanding that people are not protecting themselves – with only one in four (25%) saying they are adequately protected if they lose the main income from their household. A further three in 10 (31%) believe they would be okay in the short term (up to six months) and four out of 10 (38%) acknowledge they would be in trouble.

Commenting on the findings, Scottish Widows’ protection market director Nick Kirwan says: “We all believe it won’t happen to us – pure and simple – but unfortunately sometimes it does. There has been a major shift in the nation’s health in recent decades which means that whilst the incidence of major chronic illness – such as cancer, heart disease and stroke – has increased; so too have survival rates. This means that you’re more likely to survive than to die from a critical illness – so life cover on its own isn’t enough.”

As Doctor Marius Barnard – who was part of the team that performed the world’s first heart transplant - points out: “Telling your patient’s family that the heart transplant was a success and watching the joy on their faces, visiting your patient and watching them recover – the feeling of pride in your profession is overwhelming. But then watching them and their family slip into financial poverty is heart-breaking.”

Over half of Brits have less than two months’ salary tucked away in savings

The report also shows that for many falling back on their savings simply is not an option. Over one in four (27%) have no savings at all – and a further one in four (25%) have less than £3,000 tucked away for a rainy day. As the report shows the average household spends £1,100 a month on essentials meaning that for more than half of all households in the UK their savings will last less than three months.

As with debt, families are in an even worse position:

Assuming the average household needs £1100 a month to survive – then only 3 out of ten (30%) claim to have enough money to comfortably survive six months (i.e. they have more than £6,600 tucked away).