With 4 million people in debt to energy suppliers, and 2.6 million struggling to pay their monthly bills, leading UK insurer asks how households already under financial pressure would cope without their main income Following research released this month by price comparison site, uSwitch, it has been revealed that 4 million households in the UK are in debt to their energy supplier.* This comes in the wake of research by Legal & General, which found that 2.6 million people in the UK were struggling to pay bills, with an average shortfall of £85 per month.** With so many people already behind on their payments, leading insurer, PG Mutual, is warning UK bill payers to consider how they would manage this debt and deficit if they were to lose their income altogether, due to illness or injury. For many people in the UK, their monthly salary is already not enough to cover the amount that they need to pay out each month. Despite this, by organising repayment plans and juggling debts, most people are able to manage their money and stay above water. For example, the research by uSwitch showed that one in ten people will organise a repayment plan for their energy bills, rather than paying in a lump sum. However, one thing that even the most careful financial planning cannot take into account is the unexpected income loss that can come from having an accident or falling ill, and having to take long-term sick leave. Many people have no idea what their employer would pay them if they were to fall ill or suffer an accident that left them on long-term sick leave – commonly, it is thought that an employee will receive their current salary until they can return to work; however, this is not always the case. Many people are also unaware that Statutory Sick Pay is just £87.55 per week.^ With the average UK household spend now standing at £489.00 per week, many people would struggle to pay their main weekly outgoings, never mind paying out for additional debt repayments and making up the deficit between their salary and ever-increasing bills. PG Mutual Chief Executive Officer, Mike Perry, explains, “We’re hearing more and more about how people are living beyond their means, and spending more than they have each month – but what if you didn’t even have your current salary? What if, due to no fault of your own, you fell ill or had an accident that left you unable to work? It’s only at this point where most people tend to find out about their sick pay benefits. In a lot of cases, it can be an unpleasant surprise to find you’ve only got a short time to recover on your full pay, before you go on to state benefits. “No one likes to think about having an accident, but these latest statistics should be a stark warning to everyone who has bills to pay and debt repayments to make each month to think about protecting their income. After all, if you’re already stretching what you have to the limit each month, how are you going to meet your financial obligations if what you have coming in is severely reduced? “Income protection insurance is still not commonly thought of as an ‘essential’ type of insurance, in the same way that home or car insurance is; however, having it in place means if you were to fall ill or have an accident that left you unable to work for a period of time, you would receive a regular monthly payment, which you would receive on top of Statutory Sick Pay. So, if you were to find yourself off work sick, at least you have the peace of mind of knowing you would have money coming in to help you cover your monthly costs.” As noted by Which? in their online guide to income protection, “The one protection policy every working adult in the UK does need is the very one most of us don’t have – income protection.” To find out more about how you could protect your finances in the event of falling ill or suffering an accident, visit www.pgmutual.co.uk. *uSwitch, May 2014
**Legal & General, February 2014
^DWP Website, April 2014 Go Back
PG Mutual is the trading name of Pharmaceutical & General Provident Society Ltd. Registered office: 11 Parkway, Porters Wood, St Albans, Hertfordshire AL3 6PA. Incorporated in the United Kingdom under the Friendly Societies Act 1992, Registered Number 462F. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, Firm Reference Number 110023.