It seems that people are more interested in maintaining their lifestyle paying scant regards to financial planning. A paradox emerges from the poll taken by the Association of British Insurers involving 2,000 people. It reveals that around 25 per cent of people were unaware how they would make their ends meet if the main earner in their family died. Another 21 per cent said they might face similar situation should they suffer a long-term illness. The survey shows that a huge number of Britons have no idea how they would cope financially in a crisis triggered by different situations.

For thousands of people, cutting down on expenses, selling or pledging their homes, using savings and relying on family and friends is the usual course of action in case of financial emergencies. However, there is always a risk involved in taking loan by pledging your home to the lender. Many people try to avoid this risk by taking recourse to security-free borrowing.

Unsecured loans are among the favourite borrowing options for people in financial trouble. These are security-free means of borrowing money that can be extended upto £25,000 at a rate of interest that is very much affordable. The level of personal loans is increasing by the day but the awareness level regarding the financial planning is surely lacking somewhere. One of the leading money charities in the UK says that the total personal debt at the end of December 2007 stood at £1,409 billion. This is despite the fact that credit crunch has affected the availability of credit across the country and people are facing big deterrence in the form of high borrowing costs.

Many lenders like Northern Rock withdrew their range of unsecured personal loans from the market amid the credit crunch and in a bid to avoid offering riskier loans at a time when the market conditions were not conducive. Unsecured personal loans are offered by the lenders without requiring any security to be placed by the borrowers. These are one of the easiest means of borrowing money as you can get upto £25,000 without any need to pledge your home. Borrowers know that they are free to use unsecured loans for any purpose they wish. This makes them go crazy for these types of loans even though they are required to pay a little higher rate of interest. As these loans are available online, it only adds to the popularity among the masses.