Only 19% of British adults are adequately protected against unexpected health or financial shocks, despite more than four in 10 believing they have sufficient cover, Iress reveals.

Iress’ Financial Readiness Index found that while 41% of British adults believe they have adequate protection against unexpected life events, fewer than one in five actually meet the criteria for it.

Meanwhile, only 14% of respondents say that they have income protection insurance, which can protect earnings if someone is unable to work.

Among those who sought professional advice during the homebuying process, 71% hold critical illness cover, compared to only 36% across all homeowners, demonstrating the positive impact of adviser involvement on protection levels.

Iress says it created the Financial Readiness Index as a tool to understand the disconnect between how confident people feel about their household finances and reality.

Iress UK chief executive Alistair Morgan comments: “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 adds: “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.”

Last year in the Association of Mortgage Intermediaries’ Protection Viewpoint, a study of 3,000 consumers, found that almost one in five (18%) of all British adults have started the protection journey but abandoned it – a figure that rises to 25% among under-35s.

It revealed that 47% abandon the process after receiving a quote, with older consumers (55+) and men showing even higher dropout rates (56% and 52% respectively) at this stage.

A quarter (26%) leave after the initial application stage, and a fifth (20%) drop out at the very beginning, after just researching options.