Protection 'not a priority' for UK families
Families in the UK prioritise saving and paying off debts over taking out financial protection, according to a new report from Aviva, which highlights that 61% of families do not have any life insurance.
The insurer's Family Finances Report, published today, found that 87% of the 2,004 18-55 year olds surveyed do not have critical illness cover and 89% do not have income protection. All those surveyed were either living with a partner and / or with children. Lone parent families were less likely to have protection in place than those with both parents living together. Almost half (43%) said they believed they were either under protected financially or unprotected.
Participants in the survey were asked which financial products and priorities they would address if they received a £10,000 windfall. Responses indicated that a typical UK family would first pay off unsecured debts (44%) then put money into an emergency savings account (30%) and finally put money into a long-term savings account (30%). Only 5% would take out life insurance or critical illness cover.
Forty per cent of families said it was more important to pay off debt than to save and 14% said it was more important to have savings than life insurance.
The report highlights a disparity between families' experience of illness and their willingness to invest in protection products. Almost half (42%) of families have been "significantly affected" by illness and of these 25% have seen one of the main breadwinners unable to work due to illness. Fifteen per cent have seen a family member unable to work due to mental health issues and 7% have seen a family member give up work to care for another family member.
Nineteen per cent said they could not afford life insurance because it is too expensive and 5% said it would not pay out. Aviva's data shows that 99% of life insurance claims are paid out.
The report highlighted anxiety among consumers about their finances, with 39% of respondents saying they are too stretched to take on any additional financial obligations. Among the greatest concerns are the significant increases in the cost of necessities, redundancy and unexpected expenses.
There is never a good time to talk about insurance, always some bad times. A bit of insurance is better than none.
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