Six out of ten families have no life insurance
Single parent families are the most likely not to be financially protected and are also the most likely to feel financially vulnerable as a result of being under or unprotected. Seventy-six percent of single parent families and 68% of divorced parents with two or more children told Aviva they felt financially under / unprotected.
The seriousness of this situation is highlighted by the fact that of those families who’ve been affected by illness, 25% of families testify they’ve already experienced what it is like when one of the main breadwinners is unable to work due to illness. A further 15% have seen a family member unable to work due to stress / depression/mental health issues, and 7% say they’ve witnessed a family member give up work to look after another family member.
With the report also finding UK families rely on salaries for 75% of their income it serves to highlight how vulnerable many families are to external financial shocks such as redundancy, illness or in the worst case, death; especially as 33% of families say they have no savings and 40% of families saying they save nothing each month.
As to why families do not have protection insurance, 19% say they have not bought life insurance because they thought it was too expensive and they cannot afford it, while 5% believe it never pays out and therefore isn’t worth buying.
The report also found families will prioritise paying off unsecured debts and setting up savings accounts ahead of financially protecting their loved ones and homes. When asked which priorities they would address if they received a £10,000 windfall, respondents said they would first pay off unsecured debts (44%) then start / put money into an emergency savings account (30%) and finally start / put money into a long-term savings account (30%). Only, 5% said the money would incentivise them to take out life insurance, critical illness cover or income protection.
Louise Colley, head of protection marketing at Aviva, said: “At Aviva we recognise that different family groups all face different economic pressures, but one thing that links all families is a desire to protect loved ones from unforeseen shocks.
“The bedrock of any financial planning should look at what measures are in place in case the worst were to happen. If this is ignored then any financial plans are set in sand with no firm foundation.
“Life insurance and income protection can provide families with financial peace of mind in the unfortunate event of a sudden loss of income, and critical illness insurance can provide a lump sum cash payment should the insured suffer serious illness or disease. By making sure they have financial protection in place, families can have invaluable peace of mind for a more financially secure future.”
Aviva has just launched a high profile TV advertising campaign to encourage families to think about taking out life insurance, to tackle this issue of under-protection in the UK.