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People saving for a home among most at risk of financial catastrophe if they become ill or injured, analysis reveals

People with more than £16k in savings could lose 80% of their income if they were unable to work

The Association of British Insurers (ABI) has today revealed that prudent young people saving for a home are most at risk of suffering the largest financial loss if they were unable to work due to illness or injury.

The ABI’s analysis, using its income shock calculator ‘Percy’ found that someone with more than £16,000 saved up for a house deposit, who has no dependants and has not protected their income with insurance, stands to lose as much as 80% of their monthly take-home income. This is because anyone with more than £16,000 in savings is not entitled to support from Universal Credit when ill or injured, despite this being significantly lower than the UK’s average house deposit of £41,099*.

For someone earning £30,000, this is equal to a drop of more than £1,500 every single month, from £1,995 to just £389.

Further analysis shows that even those with children, or no savings at all, stand to lose around half their monthly take-home pay if their income isn’t protected against sudden shocks, raising concerns about affordability of rent, mortgage payments and other general living costs.

The figures, sourced using the ABI’s new tool ‘Percy’ which analyses income shocks, demonstrate the difficulty that people could face if their income isn’t protected. Losing up to 80% of net pay would mean having to immediately rely on the cash they’d saved to buy their first home, potentially jeopardising their dreams of homeownership, because they do not qualify for Universal Credit.

Yvonne BraunYvonne Braun, Director of Long-Term Savings and Protection at the ABI, said: “Without the proper protections in place, many people face a financial catastrophe if they unexpectedly fall ill or are injured and are unable to work. This is particularly pronounced for younger people who have saved diligently for a house deposit as any savings above £16K wipe out their entitlement to Universal Credit, leaving them almost entirely reliant on their nest egg.

“Falling seriously ill, or indeed severely injuring yourself, can be incredibly stressful on its own, which is why we want to empower people to take action to ensure that they don’t also have to deal with financial worries at the same time.”


Impact of falling ill or being injured through the lifecourse


Children / dependents?



Gross household income


Monthly drop in income
after statutory sick pay
stops after 28 weeks

£ (Net)

Loss as a
proportion of household
income % (Net)


















Y x 2
















The chart above shows the journey one person could possibly go through as they build their savings, buy a home and start a family. They start off with a lower salary and a small amount of savings, which grows as they reach the age of 30 and now sits just above the £16,000 threshold for receiving any support through Universal Credit when ill or injured. 

As the following years go on, the person builds their savings, has two kids with their new partner and eventually uses their savings to buy a home – thus depleting their savings pot but increasing their Universal Credit entitlement. This person’s savings then continue to grow as their kids eventually move out and are no longer considered ‘dependants’, which means their Universal Credit entitlement decreases, but they do own their own home. As demonstrated above, a person with £16,000+ in savings stands to suffer the greatest financial shock of nearly 80%.

Why does the income drop vary?

The amount of support a person is entitled to is based on a wide range of different factors. One crucial factor is the amount of savings a person has – for instance, if you have more than £16,000 you will not be entitled to any support from Universal Credit at all. Universal Credit is then tapered for savings below £16,000.

This means that for the first 28 weeks of being off work, you would be entitled to statutory sick pay of £408 (unless self-employed), which would then be replaced by national insurance-based allowances for the following year, which is likely to be even less than the statutory level of sick pay. You may be entitled to other benefits, such as council tax support or other allowances, depending on your situation. Fill in the ABI’s tool, Percy, to find out more.

What is Percy The Protection Calculator?

‘Percy The Protection Calculator’ is a tool aimed at consumers, to give quick access to an accurate estimation of likely monthly income if you’re injured or fall ill. This is done by tapping into the Government’s benefit data and combining it with information provided by the Calculator’s user. 

Percy’s ‘Alpha’ version is being launched today after a period of beta testing, with dozens of industry professionals engaging with the development process. The calculator, which can be found at www.abi.org.uk/percy, has already been used nearly 4,000 times.

With one million workers finding themselves in a position where they’re unable to work every year because of illness or injury, the ABI hopes that the calculator will raise consumer awareness and help empower them to make decisions about safeguarding their financial futures.

The Calculator is aimed at raising consumer awareness and this will be its sole purpose. The data will not be stored and will not be used for any other purpose – users won’t even be required to share their name, first line of address or email address.


Notes for Editors

Enquiries to:

Malcolm Tarling                        020 7216 7410    Mobile: 07776 147667

Peter Morgan                           020 7216 7351    Mobile: 07725 245286

  1. The Association of British Insurers is the voice of the UK’s world leading insurance and long-term savings industry.
    A productive, inclusive and thriving sector, we are an industry that provides peace of mind to households and businesses across the UK and powers the growth of local and regional economies by enabling trade, risk taking, investment and innovation.
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  3. More news and information from the ABI is available on our web site, www.abi.org.uk.

Last updated 20/09/2019