All families have their trials, tribulations and uncertainties, but one thing is certain – family matters. We wanted to find out just how much UK families are doing to keep their loved ones safe and sound… through taking out life insurance.
We surveyed 2,000 British families to understand their thoughts and feelings when it comes to life insurance. Just how many people see it as a family priority?
Kamran Altaf, Head of Life Insurance at comparethemarket.com, said:
"People don’t like to think about the worst happening to a family member – but you have to question whether your finances would be protected and your family secure if it did. In these circumstances, life insurance can offer much more than just reassurance.
People usually take out life insurance when they reach key milestones in life – perhaps when starting a family or buying their first property. It’s more about your individual circumstances than age, and it’s important to review your requirements regularly”.
42% of British families don't have a life insurance policy
The average income of life insurance policyholders
The majority of people without a life insurance policy earn less than £10,000 a year. This is far below the living wage in the UK, which is currently £19,890 in London and £17,062.50 outside London. However, of those who earn £40,000 or more – more than double the living wage – 27% still don't have the reassurance life insurance can give.
The age of life insurance policyholders
People between the ages of 18 and 34 are the least likely to have a life insurance policy. This is the period where many people are hitting big milestones, like starting families, so could be seen as the most important time to take out a policy. Those aged 55+ are most likely to have life insurance.
Insurance and mortgage repayments
Mortgage repayments are one of the biggest financial outgoings for many families. For dependants to take these on without any help if a family member died could cause huge financial stress.
We asked people who have a life insurance policy whether their payout would cover the outstanding mortgage repayments on their home. We found that 22% of UK families would not be able to keep their home if the worst happened.
Why take out life insurance?
There are many reasons to take out a life insurance policy – it’s more about the stage you’ve reached in your life rather than your age. We asked people who have a life insurance policy just why they decided to take this step. See above the reasons they gave.
Why not take out life insurance?
Different lifestyles call for different priorities, so we asked those who don't currently have a policy why they feel life insurance isn’t necessary for them.
According to the survey, 56% of people overall don't have life insurance due to financial barriers. Of those who earn less than £10,000, 69% can’t afford it. And 28% of those who earn more than £40,000 also believe they can't afford it.
Reasons for not taking out life insurance (by income)
The highest percentage of people who feel they are too young for life insurance are in the 18-24 age group. However, a small percentage of people over 55 also believe they are still too young to buy a policy. The majority of people who can't afford life insurance are between the ages of 35 and 44.
Reasons for not taking out life insurance (by age)
How would you pay for a loved one's funeral?
We asked our survey takers how they would pay for a loved one’s funeral and further essential expenses.
How would you cover funeral expenses? (by income)
People who earn less than £10,000 seem to be at a loss when it comes to covering funeral expenses, with 53% having no idea how they would cope with them.
Higher earners – those with an income of more than £40,000 – have less to worry about, with 52% in this group being able to rely on life insurance cover. Of those who earn a higher amount, 21% have no idea of how they would pay for a funeral, and 14% would rely on extra help from a death in service plan.
How would you cover funeral expenses? (by age)
Although it’s an issue younger people may have to deal with, 47% of the 18-24 age group would have no idea of how to go about paying for a loved one’s funeral. The same is true of over 40% of those aged 25 to 44.
People who are older are more likely to have backup options.
With the demands of mortgage repayments, bills and other outgoings on family finances, it’s understandable that many people feel they can’t afford the cost of life insurance. But many families have embraced the idea of having financial security, even if the worst happens. It’s this peace of mind that having a life insurance policy can bring.
We surveyed 2,000 British families in October 2019 via Maru/Usurv.
Excluded survey results from those aged 65+ due to a small sample size.