With Debt Problems More Prevalent Amongst the Under 25s, PG Mutual, Asks Why
With debt problems more prevalent amongst the under 25s, leading insurer, PG Mutual, asks why the majority of young people are still ignoring the importance of insuring their incomes.
As a young professional in the UK, it’s not unusual to take out credit in order to finance your lifestyle. From student loans, through to credit cards, car leases and mortgage loans, most people under the age of 25 will have a substantial range of financial obligations. However, it seems that even those who are able to manage their mounting monthly repayments haven’t given much thought as to how they would make them if they were to lose their income due to illness or injury.
Research by a debt charity in 2013 found a third of adults seeking debt advice were under the age of 25*; however, research has shown that people within this age group are the least likely to have an income protection insurance policy in place.** This means that if you’re under 25, you’re likely to have the highest level of credit repayments to make, yet you risk not being able to repay any of them if you were to fall ill or suffer an accident, and lose your income.
One reason that many under 25s may not have income protection insurance is the common belief that, at a young age, you are unlikely to fall ill. This doesn’t consider the fact that an accident that prevents you from working can happen to anyone at any age, and is also contradicted somewhat by recent figures that show over 30,000 people under the age of 25 were claiming Statutory Sick Pay in the UK.^
Currently, for under 25s, SSP stands at just £86.70 per week – around £346.80 per month. The average UK household spends £489.00 per week or £1,956.00 per month on their outgoings – so this would barely be enough to cover most people’s rent or mortgage, let alone pay for fuel, food, utilities etc., never mind repayments on a car or credit card, or other debt repayments. This highlights the serious implications for those who don’t have additional protection in place.
Another misconception by many young people is that the idea of only receiving SSP doesn’t apply to them, as they believe that their current employer will pay them if they are off sick for a long period of time. A survey by PG Mutual† found that nearly 30% of people questioned had no idea what their employer would pay them if they had to take sick leave, or for how long. There appears to be an assumption by many people that if they had to take an extended period of time off work due to illness or injury, their employer would continue to pay them at their current pay rate – however, this is not usually the case, and is becoming less and less likely as companies look to save money in the current climate.
PG Mutual Chief Executive, Mike Perry, explains, “Young people think that income protection is just another type of insurance that people are trying to sell to them, like PPI or Critical Illness Cover. They are also a lot less likely to consider their health than someone older. However, when you are young, it is the ideal time to take out income protection insurance, as your premiums are likely to be lower, and if you take out insurance with a mutual, you may also find there is an investment element to the policy, which you can start building up for your future.”
To find out more about PG Mutual’s income protection policy and how little it could cost you per month, visit www.pgmutual.co.uk.
*MoneyExpert, February 2013
^YouCouldSave.co.uk, February 2013
†PDA Survey, 2012