12m UK adults suffer financial hardship due to unexpected ill health

Leaving them with nearly 50% more debt and 40% less savings.

  • Nearly one in three (31%) UK adults have experienced leave from work due to unexpected ill health, a cancer diagnosis or even a death in the family1.
  • Of these, 77% – or 12.3 million people – have seen their finances suffer as a consequence.
  • The 31% who have experienced unexpected health events or death have seen their income drop by a quarter (24%) and savings and investments crash by two-fifths (40%).
  • Two in five (38%) had to apply for benefits or other Government support while 22% had to use their savings.
  • One in six (15%) had to downsize, move in with family, rent or in extreme cases even became homeless.
  • 1.9 million people who have experienced an unexpected illness or death don’t think they’ll ever financially recover.

Almost a third (31%) of UK adults have experienced temporary or permanent leave from work due to ill health, a cancer diagnosis or even a death within the family1, research from Aviva shows.

More than three quarters (77%) of these have seen their finances suffer, equivalent to 12.3 million people2.

Aviva’s Protecting Our Families report shows the reality of the financial fall-out caused by unexpected illness, with a particularly damaging effect on families with young children. The research shows more than a quarter (27%) of parents with dependent children3 have suffered a health crisis, with nearly all (91%) of these saying their finances were negatively affected.

UK adults who have suffered unexpected health events have noticeably poorer finances. Aviva’s data shows the average monthly income of someone who has experienced this is 24% lower than those who have not (£1,909 vs. £2,518). They also typically have 40% less in savings and investments (£2,991 vs. £5,011). In addition, they have 47% more in average debt (£9,692 vs. £6,573), possibly suggesting many who experience a health crisis are forced to turn to borrowing to cope.   

Table: UK adults who have suffered a health crisis have poorer finances

 

Have experienced a health crisis

Have not experienced a health crisis

Difference

Average monthly net income

£1,909

£2,518

-24%

Typical savings and investments (excl. pensions)

£2,991

£5,011

-40%

Average debt (incl. student loan)

£9,692

£6,573

+47%

One in six were forced to downsize, move back in with family, rent or even become homeless following unexpected ill health or death of a loved one 

UK adults who have experienced unexpected health events or a death in the family have had to resort to a number of measures to get by. Almost two in five (38%) had to apply for benefits or other support from the Government, while over one in five (22%) had to dip into their savings. In addition, 13% cited that they stopped saving for their retirement. One in six (16%) also had to sell their personal possessions.

Worryingly, 15% had to either downsize, move back in with family, start renting or even became homeless – demonstrating the life changing impact an unexpected loss of income due to ill health can cause.

Table: Measures taken and impacts following a loss of income due to ill health or death

 

All UK adults

Parents with dependent children

Received benefits/support from the government

38%

35%

Cut back on luxury spending for my children/family

22%

34%

Dipped into a rainy day fund

22%

24%

Sold personal possessions

16%

18%

Received financial help from a family member

13%

17%

Stopped saving for retirement

13%

17%

Percentages do not add up to 100% as respondents could pick more than one answer. Not all answer options are included.

One in ten don’t think they will ever recover financially from a health crisis

Of those UK adults who have experienced loss of income due to ill-health, serious illness or a death in the family, more than half (56%) recovered within a year. However, one in five (18%) say this took longer than a year while 13% still haven’t recovered, and don’t know how long it will take.

More than one in ten (12%) or 1.9 million people who have experienced a health crisis don’t think they will ever recover from it financially. Women (16%) are twice as likely to say this as men (8%).

Paul Brencher, Aviva UK Health and Protection Director, said:

“Millions of people have seen their finances damaged by poor health: without any plans in place, a loss of income caused by ill-health can have a long-lasting effect on people’s finances. This can be particularly difficult for those with a family to support, who often have a range of financial obligations – such as mortgage payments and bills – and also the added concern of how they will provide for their children.

“Illness can strike at any moment, and not having a plan in place for this could be a dangerous risk to take. Our research shows that many people who have experienced a health crisis have resorted to a number of unpleasant measures, like using nearly half of their savings, selling their personal possessions or even their home.  

“Addressing the question of ‘what would I do if…’ is critical. Having honest conversations with family members about how you would cope financially in the event of unexpected ill health or even worse is vital, making plans to address any gaps in protection. The Government can also help by continuing to make available, and improving, information on financial education and assistance for families, whilst the insurance industry must do all that it can to correct the perception that insurance is unaffordable and make applying for insurance simple and easy to do.”

Four important considerations to protect yourself and your loved ones from the unforeseen:

  • Talk about it: Discuss with your loved ones how your family would cope in unexpected events. A family’s finances can be complex so make sure all financial elements are considered, including savings, insurance, housing and other assets and outgoings.
  • Review your plans when life changes: Whether it is the birth of a child, a new home and mortgage, or a new rental agreement, all families need to reconsider how they would cope in unexpected events and take action.
  • Take a long-term view: Make sure any choices are balanced over the short-term and the long-term. For example, accessing pension funds earlier than planned may be regretted in later life.
  • A small sacrifice now could make all the difference in the future: Boosting savings or taking out relevant insurance will help protect families’ financial resilience and ensure unexpected events are easier to financially manage.

ENDS -

Enquiries:

Instinctif Partners: Rachel Morrod: 0207 427 1431 / 07815 628 825 or aviva@instinctif.com

Aviva Press Office: Monique Crockett (01904 684128 | Monique.crockett@aviva.com)

Aviva’s spokesperson, Paul Brencher, is available for comment/broadcast interview

Methodology

The ‘Protecting Our Families’ study was designed by Aviva in collaboration with ICM Unlimited and Instinctif Partners. All findings quoted, unless otherwise referenced, are from research carried out independently by ICM during Q4 2016 among a representative sample of 2,500 UK adults, including 784 who have experienced loss of income due to ill health, serious illness or death within the family. 

 Technical notes:

  • A median is described as the numeric value separating the upper half of a sample, a population, or a probability distribution, from the lower half. Thus for this report, the median is the person who is the utter middle of a sample. All figures are medians unless otherwise specified and are referred to as ‘typical’ rather than ‘average’ (mean).
  • A mean is a single value that is derived by adding all the values on a list together and then dividing by the number of items on said list. This can be skewed by particularly high or low values.

References 

1 Refers to the death of a long-term partner.

2 ONS Population Estimates by single year of age and sex for local authorities in the UK, mid-2015. There are 51,339,161 adults in the UK aged 18 and over.

3 Parents with dependent children are classed in this release as those with children (aged under 18 or 18 and above but mostly financially dependent on their parents), including two-parent families who are married or cohabiting along with divorced, separated or widowed parents. 1,593 in the sample were parents with dependent children.

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Notes to editors:

  • Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers.
  • In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.  
  • Aviva’s asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £340 billion in assets. Total group assets under management at Aviva group are £450 billion.
  • Aviva helps people save for the future and manage the risks of everyday life; we paid out £34.4 billion in benefits and claims in 2016.
  • By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.
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