The findings were established in collaboration with the Smith School of Enterprise and the Environment at the University of Oxford, and the report encourages consumers to address the question of how long their savings would last, in the event that they lost the ability to work.
An income gap is defined as the reduction in household income as a result of an adult wage earner, upon whom the household relies, becoming incapacitated or otherwise unable to work, taking into account any public or private income replacement.
Results of the study revealed that 75% of respondents had no income protection insurance in place, to cover the possibility of loss of income through illness, incapacity or premature death. Of those that did, 72% had such coverage from their employers. Six out of ten respondents said that their savings would only last six months and one in five said that their savings would last less than one month.
As a global insurer, our partner, Zurich took up the responsibility to increase awareness of income protection gaps. In the event of illness or disability, savings are likely to dwindle rapidly, as they may be needed to cover ongoing medical treatment, whilst still having to pay the rent or mortgage. Says Jason Waldron, SME Segment Specialist at Zurich International Life, “Income protection is vital, as your finances remain enabled, at a time when you are not.”
Zurich International Life offers practical recommendations for addressing this critical issue and insights into how employers, insurers and individuals can work together to close income protection gaps.
In the UAE, there is no state provision for expats to cover loss of income due to illness, disability or premature death. Hence this responsibility shifts to the individual or their employer.
Providing income protection for employees can have significant benefits for employers too, as this is an opportunity to retain and attract valued staff. The Zurich report revealed that 60% of employees would prefer a good benefit package over an increase in salary only.
Income protection also offers a solution to the global phenomenon of presenteeism, which is when sick employees come to work due to fear of loss of income. This is of course counterproductive, as sick employees are likely to under-perform at work and are very likely spread illness to other employees.
The demand for income protection insurance is set to increase exponentially as people are living and working longer. Statistics show that more than a quarter of the workforce is likely to be unable to work at some point during their working lifetime.
Zurich International Life offers a tailor-made income protection scheme, that pays up to 80% of lost income until the age of 65, in the event that a claimant suffers a disability that prevents them continuing to work.