New research from Iress has revealed that just 19% of Britons are adequately protected against unexpected health or financial shocks, despite more than four in ten believing they have sufficient cover.
The findings from the Iress Financial Readiness Index reveal a clear disconnect between how confident people feel about their household finances and reality. While 41% of Britons believe they have adequate protection against unexpected life events, fewer than one in five actually meet the criteria for adequate cover.
The research also highlights low take-up of key protection products in the UK. Just 14% of respondents say that they have income protection insurance, which can protect earnings if someone is unable to work.
Iress reports that where advice is taken, outcomes are often stronger. 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 created the Financial Readiness Index as a practical tool to understand this disconnect. The Index measures how well people can meet their current and future financial needs by combining confidence about their finances with real behaviours such as saving, investing, protection and retirement planning.
"This research shows a clear disconnect between how protected people feel and the reality of their cover," Alistair Morgan, CEO at Iress, said. "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. 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, Iress’ managing director for UK sourcing, 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."
