12m hit financially by family health crisis

Three in ten UK adults have seen their finances hit as a result of temporary or permanent leave from work due to ill health, a cancer diagnosis or death within the family, research from Aviva shows.

The research shows 31 per cent of UK adults have had to take forced leave from work, of which 77 per cent – 12 m people – have seen their income drop by an average of 24 per cent and savings and investments shrink by 40 per cent.

Of those forced to leave work, 38 per cent have had to apply for benefits or other Government support while 22 per cent have had to rely on savings, while 15 per cent have had to downsize, move in with family, rent or in extreme cases become homeless.

The research found 1.9 million people who have experienced an unexpected illness or death don’t think they’ll ever financially recover from it.

Aviva’s Protecting Our Families report identifies a particularly damaging effect on families with young children. The research shows 27 per cent of parents with dependent children have suffered a health crisis, with 91 per cent 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 a health crisis is 24 per cent lower than those who have not, falling to £1,909 from £2,518. They also typically have 40 per cent less in savings and investments – £2,991 compared to the average of £5,011 of families not hit by a health crisis, and have 47 per cent more in average debt – owing £9,692, compared to an average of £6,573.

More than half – 56 per cent of those UK adults who have experienced loss of income due to ill-health, serious illness or a death in the family recovered financially within a year, but 18 per cent said it took longer than a year and 13 per cent still haven’t recovered and don’t know how long it will take. 12 per cent think they will never recover from it.

Aviva UK health and protection director Paul Brencher says: “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.”