Britain's financial resilience crisis leaves millions vulnerable to income shocks
- More than a third of employees are financially fragile despite being in work
Millions of working households could see their finances unravel far sooner than they realise, according to new analysis from Royal London, which warns that the UK's financial resilience remains worryingly weak despite signs of recovery from the cost-of-living crisis.
Royal London's Financial Resilience Report found that the average UK adult scores just 33% on its Financial Resilience Barometer, placing the nation in the 'Economically Exposed' category and highlighting how many households remain ill-prepared for unexpected financial setbacks.
Perhaps most concerningly, employment is no guarantee of financial security. More than a third (35%) of employees are classed as financially fragile despite being in work, while a further 40% are considered economically exposed.
The findings highlight the need for a broader conversation about family financial resilience and the role protection products can play in helping households cope with unexpected events.
The research found that life shocks can have a profound impact on financial wellbeing. More than four in ten (42%) people who have experienced a life event in the last two years, such as bereavement, divorce or job loss fall into the financially fragile category.
For those already struggling, there is often little financial breathing space. Financially fragile households have average cash savings of just £1,136 and only £77 of discretionary income each month after essential spending.
Gregor Sked, Senior Protection Technical Manager at Royal London, said:
"When people think about protection, they often focus on the biggest life events, such as death or serious illness. Those conversations remain incredibly important, but modern family finances can be knocked off course by a much wider range of pressures.
"Income has always been the engine room of a family's finances. Our Financial Resilience Report shows many households are operating with very little financial breathing space, meaning even a short interruption to earnings can have significant consequences when cash savings are low and disposable income is limited.
"That's why income protection should be viewed as part of a broader financial resilience strategy. Families aren't simply looking to insure against illness, they're looking for confidence that they will be able to withstand life's unexpected challenges."
The protection industry has already seen demand for income protection rise for a second consecutive year, with industry data showing applications increased by 7% in 2025 following strong growth in 2024. Yet advisers and providers continue to highlight a significant protection gap.
Advisers have an opportunity to reframe protection conversations around family resilience, helping clients understand how different products work together to support households facing a range of financial risks.
For further information please contact:
Neil Cameron, PR Manager
- Email: neil.cameron@royallondon.com
- Mob: 07919 171969
Notes to editors
All figures are from YouGov Plc. Total sample size was 4045 adults. Fieldwork was undertaken between 4th - 19th March 2026. The survey was carried out online. The figures have been weighted and are representative of UK adults (aged 18+).
Estimates of the number of UK adults who expect to pay housing costs were based on ONS estimates for population data, with a base number of 55 million UK adults.
*Data taken from Royal London’s Financial Resilience Report and calculated by Royal London’s Insight team.
**Based on 55 million UK adults as a base figure (ONS verified) 25% = 13,750,000.
About Royal London
Royal London is the UK's largest customer-owned life, pensions, and investment company, and one of the top 30 mutuals globally*. With over 160 years of heritage and no external shareholders, we're able to take a long-term view, focusing on supporting better outcomes for our customers.
Today, Royal London looks after 8.4 million life and pension policies, with £212 billion of assets under management and over 5,000 colleagues**. In 2026, we shared £199 million of our profits with approximately 2.4 million eligible customers.
We invest in partnerships that reflect our values, including being the only Founding Partner of the first British & Irish Lions Women's Team, supporting women's and girls' rugby across grassroots and elite levels to help develop the next generation of players and coaches. All driven by our commitment to doing what's right for our customers.
Royal London works for you.
Discover more at royallondon.com.
*Based on total 2024 premium income. International Cooperative and Mutual Insurance Federation Global data, 2026.
**Figures quoted are as at 30 June 2026.
