32% of adults in the UK have experienced a serious financial shock in the past five years such as losing their job or being unable to work due to injury, but only 35% had the right insurance in place to cushion the financial blow, according to new research from the Money Advice Service.

The Money Advice Service and Association of British Insurers have come together to encourage the UK to build up a rainy-day savings fund or consider relevant insurance policies to safeguard themselves and their loved ones against financial trauma.

There is a gap between the number of people who experience unexpected events and those who have a contingency in place to safeguard their finances. Only a limited number of UK adults have a protection insurance safety net – such as income protection – with just 17% of adults considering it a necessity, despite a very similar amount (18%) knowing someone whose standard of life was severely impacted due to not having protection in place.

Top reasons for not taking income protection insurance include:

Can’t afford it – 28%
Not considered it – 17%
I have no one dependent on me – 11%
I would rather have the spare cash now – 10%
I don’t think I’ll lose my job – 10%

8% of people aren’t concerned about what happens to their family’s finances after they are gone. However, 67% of adults confirmed they have people reliant on their income, with children (35%), spouses (26%) and parents (6%) topping the list of dependents. Furthermore, 44% agreed that protection insurance is important to protecting their family.

While insurance can be a sensible way to protect a household’s financial future, building up an emergency savings pot is another way to help guard against the unexpected – only one in four adults (39%) are confident that they enough money saved to cover unexpected costs.

For 12% of UK adults, an incident happening to a friend or family member would be a ‘wake up’ call when it comes to considering protection insurance – while 16% say having children would make them take out protection insurance.

Andy Webb, money spokesperson at the Money Advice Service, said: “The research highlighted that there is a big gap between the number of people who experience financial shocks, and those that protect their lifestyles by either saving for a rainy day or considering the relevant protection insurance.

“As the research suggested, many of us find it difficult to comprehend the thought of illness and death and as a consequence we may be tempted to put safeguarding our finances to the back of our minds. We never know what is just around the corner but it is important for consumers have all the information they need to plan ahead for how they would cope financially should the worst happen.

“Creating a rainy day fund is a good first step to safeguard both yourself and your family. We would also urge people to consider whether insurance might be an option within their planning and budgeting. There is a wealth of advice, tips and tools available on the Money Advice Service website to help make those decisions easier and help you plan for a secure financial future.”