Many Parents of Young Children in the UK Lack Life Insurance
According to recent research from Compare the Market, a concerning 39% of parents with children at home lack life insurance. This study, focusing on parents of children under 18, reveals significant financial vulnerabilities for families.
The research highlights that 90% of parents worry about the financial future of their children in the event of their death. Figures from the Childhood Bereavement Network estimate that nearly 27,000 parents die each year, leaving dependent children. This equates to a parent dying approximately every 20 minutes.
Despite these statistics, only 61% of parents have some form of life insurance. Within this group, 48% have a dedicated life insurance policy, and another 21% receive life insurance from their employer, such as death-in-service benefits. A mere 8% have both.
For parents with mortgages, the situation is particularly precarious. Over half (53%) owe more than £100,000, with an average mortgage debt of £145,720. Without life insurance, a home with an outstanding mortgage could face repossession upon a parent’s death if the surviving partner or beneficiaries cannot cover the payments. Seven in ten parents (70%) also have outstanding credit card or loan debts, averaging £5,115.
Further compounding these concerns, 42% of parents with partners believe their partner would struggle to afford mortgage or rental payments on a single income. Additionally, half of parents (50%) anticipate their partners would not be able to cover household bills for more than two months using their existing savings.
The study also revealed that only one-third (33%) of parents have an income protection policy, and 42% have critical illness cover. A surprising 61% believe they could not afford regular bills for more than three months if they were unable to work due to a serious illness.
Among parents with life insurance, many may be overpaying for coverage because they haven’t reviewed their policies recently. The research indicates that 47% haven’t reviewed their policy in the past five years, and 37% are unaware of the payout amount. A quarter (28%) purchased their policy directly from an insurer without comparison, potentially missing out on better deals.
Tom Lyon, Director at Compare the Market, emphasized the importance of life insurance. “Most parents worry about protecting their children and securing their future. Life insurance could at least offer some reassurance, by providing financial protection. Typically, life insurance pays out a lump sum in the event of a policyholder’s demise, which could cover things like the mortgage, outstanding debts, or regular bills. It could also be used for future expenses, giving children some financial security and a single parent, for example, breathing space to adjust to a very difficult new reality.”
