Brits ill prepared for financial burden of critical illness

22 February 2016

  • One in three don’t know how they’d cope if they suffered a critical illness
  • Biggest worry is not being able to maintain payments and bills while ill
  • Around half would rely on savings to get by but average pot is just £7,700*

Critical illnesses such as cancer, a heart attack or stroke can be very stressful for both the person diagnosed and their families, but worries over how to continue paying the bills adds to the pressure, according to research from Nationwide Protection.

While some people continue to receive all or part of their salary while off work, others are only entitled to statutory sick pay of just £88.45, posing a potential challenge to household budgets. However, just 14% of people currently have critical illness cover, according to the Nationwide survey. This is despite nearly three in five (57%) people having had an experience of critical illness – either themselves or through family and close friends.

The most prevalent reasons for not having critical illness cover are:

Reasons for not having critical illness cover Percentage
Willing to take the risk of getting ill 19%
Have sufficient finances to cover sickness period 16%
Don’t worry about things until they happen 14%
Too young to require critical illness cover 12%
Don’t believe they will become critically ill 8%

However, the Nationwide Protection poll, of 2,000 UK adults, shows that less than a third (31%) could afford to support themselves if they were unable to work due to a critical illness, with a further one in three (36%) saying they wouldn’t know how to cope financially. This income shortfall would lead to nearly half (48%) relying on their savings to plug the gap. But Nationwide customer data shows the average person has just £7,707 saved - an amount that could quickly dwindle if it was being used to pay the mortgage and other bills.

The biggest financial worries around critical illness are:

Biggest worries if critically ill Percentage
Not being able to paying the bills 45%
Getting into debt due to illness 34%
Not being able to pay the mortgage 30%
Having to forego holidays due to cost 10%
Cutting back at Christmas and birthdays 6%

The research highlighted that only those over 55 years old were really in a position to rely on their savings with more than a quarter (28%) feeling they had ample money to cover themselves, compared to just four per cent of 18-24, six per cent of 25-34 and eight per cent of 34-44 year olds.

Customers who are diagnosed with a critical illness and are concerned about how they will cope financially are encouraged to get in touch with Nationwide who can provide advice on a range of solutions and services available to support customers, including a specialist advice service for those living with cancer.

Rob Angus, Nationwide’s Strategy & Propositions Director for Financial Planning, Protection and Investments said: “A critical illness diagnosis can be devastating and stressful for the whole family, but if you’re unable to work or are forced to give up work, then the worry of how you will pay the bills can add to the pressure.

“Our research shows that many people don’t consider getting cover, despite most having experienced critical illness either themselves of through friends and family. This approach of throwing caution to the wind means that many are unprepared for how they will cope with day-to-day bills without factoring in additional costs for them and their family.

“Many expect to rely on their savings, but the research shows this is only really an option for older people who have managed to build up a sizable nest egg over a number of years. Having a critical illness policy in place takes away the worry of how you will cope financially and instead focus all your attention on your recovery.”

Notes to Editors

*Average savings pot of Nationwide members

Nationwide’s critical illness cover is provided by Legal and General.

Details about Nationwide’s specialist support service.

According to the poll, the main reasons people claim not to have critical illness include:

  • Didn’t know such cover existed - Critical illness can help minimise the financial impact on a person or their loved ones by providing a lump sum on diagnosis of a specified Critical Illness. For example, if they may need to give up work to recover, the money could be used to help fund their mortgage or rent, everyday bills or even simple things like the weekly food shop – giving them and their family peace of mind when they need it most. Other cover available includes Income Protection which pays a regular income if the person is unable to work due to sickness or accident for longer than an agreed deferred period, often linked to how long employer sick pay will last.
  • Don’t think the cover will pay out – Latest figures from Legal & General, Nationwide’s provider of critical illness cover, show that more than 92% of claims were successful.
  • Don’t think they can get cover as they have a pre-existing condition – A pre-existing condition does not automatically exclude you from cover. As long as a condition is disclosed the policy can go ahead, but cover for the pre-existing condition may be excluded from the policy.
  • Cost of cover – Once a customer’s medical history has been assessed, the amount they pay each month will remain constant. Premiums start from just £6 per month increasing based on the amount of cover required. If a customer has a pre-existing condition, this may make them a higher risk and may be factored into the premium.

About Nationwide

Nationwide is the world's largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million customers.

Customers can manage their finances in a branch, via the mobile app, on the telephone, internet and post. The Society has around 18,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

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