Just 19% of Britons are adequately protected against unexpected health or financial shocks, according to research from Iress, highlighting what the technology provider describes as a significant gap between perception and reality.
The findings, drawn from the Iress Financial Readiness Index, show that while 41% of respondents believe they have sufficient protection in place, fewer than one in five meet the criteria for adequate cover.
The data also underlines the limited penetration of key protection products. Only 14% of respondents said they hold income protection insurance, which provides cover if someone is unable to work due to illness or injury.
The Index measures financial resilience by combining consumer confidence with observable behaviours, including saving, investing, protection and retirement planning. Iress said the aim is to assess how well individuals can meet both current and future financial needs.
The research suggests that adviser involvement materially improves outcomes. Among those who sought professional advice during the homebuying process, 71% hold critical illness cover. That compares with 36% across all homeowners.
Alistair Morgan, chief executive for the UK at Iress, said: “This research shows a clear disconnect between how protected people feel and the reality of their cover. That current gap represents millions of households who may be far more exposed to potentially life-changing events than they realise.”
“Major life events such as buying a home, getting married, or starting a family are key milestones to consider protection cover. Far too many people are making these decisions without professional support.
“The data shows that adviser involvement significantly improves outcomes, helping ensure protection is in place when it’s needed most.”
“Engaging with a financial adviser or seeking guidance through education and tools could make all the difference in helping people achieve true financial security.”
Morgan added: “Closing the protection gap will require greater awareness, earlier engagement and more open conversations about financial resilience.
“We hope these findings encourage households to check their cover and seek advice where appropriate.”
Jennifer Rafferty, managing director for UK sourcing at Iress, added: “The protection gap we’re seeing isn’t just about products, it’s about understanding. Too many people don’t recognise their vulnerabilities until it’s too late.
“As an industry, we must equip consumers and advisers with smarter tools and technology that make protection conversations clearer, more relevant and easier to act on.
“By combining data-led insights, such as those from the Iress Financial Readiness Index, with intuitive digital experiences, we can better educate consumers, support advisers and meaningfully narrow the protection gap.”
