93% of families do not feel they have adequate financial protection, according to Aviva’s first Family Finances Report.
It found that, on average, 61% of families confessed they don’t have even basic life insurance, with 87% saying they are without critical illness cover, and 89% without income protection.
The family unit most likely not to have protection insurance are single parent families, who are also the most likely family unit to feel financially vulnerable as a result of being under/unprotected. 76% of single parent families and 68% of divorced parents with two or more children told Aviva they felt financially under/unprotected.
These findings were revealed in a new quarterly report from Aviva, which examines the finances and concerns of the 84% of the UK population who live as part of a modern family. The first issue of the Aviva Family Finances Report finds a disturbing 42% of families admit they have been seriously affected by illness and yet still do not have any protection insurance in place.
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. Aviva says its own data shows life insurance costs from as little as £5 a month and 99% of its life insurance claims are paid out. The average sum paid out on a life insurance claim by Aviva is nearly £51,000.
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 told Aviva 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%). 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
