Aspiring first-time buyers with no income protection ‘risk financial shock’
People saving for their first home could be particularly at risk of a financial catastrophe if they become ill or injured, insurers are warning.
The Association of British Insurers (ABI) said that someone with more than £16,000 saved up for a house deposit, who has no dependants and has not protected their income with insurance, could face having to dip into their savings pot to cover their outgoings.
This is because those with more than £16,000 in savings are not entitled to support from Universal Credit when ill or injured, it said.
The ABI has a new tool called Percy which analyses potential income shocks.
Yvonne Braun, director of long-term savings and protection at the ABI, said: “Without the proper protections in place, many people face a financial catastrophe if they unexpectedly fall ill or are injured and are unable to work.
“This is particularly pronounced for younger people who have saved diligently for a house deposit as any savings above £16,000 wipe out their entitlement to Universal Credit, leaving them almost entirely reliant on their nest egg.”
Percy – at www.abi.org.uk/percy – gives people give quick access to an estimate of their likely monthly income if they are injured or fall ill.