- Almost half of UK parents do not have a life insurance policy, with 35% lacking cover for both partners
- Half of parents say they don’t have life insurance as it is too expensive, but 54% admit they don’t know the monthly cost of cover
- Over a third of parents say a simpler application process and better communication from providers over policy benefits would encourage them to take out protection
Half the UK’s parents are putting their family’s financial stability at risk in the event that they should die, according to the latest research from comparethemarket.com. A survey of UK parents with children under the age of 18 revealed that nearly half (49%) do not have a life insurance policy. Of those parents in a couple, over one in three (35%) did not have life insurance for either partner.
Life insurance typically pays out a lump sum to children, a partner or other relatives who rely on the policy holder’s income to cover a mortgage or other living expenses should they pass away.
The potential cost of life insurance is the biggest barrier to parents taking out financial protection for their families. Of those parents who did not have life insurance, half (50%) said that they had not taken out a policy because it was too expensive and they could not afford the monthly payments, and 49% agree that they would be encouraged to take out life insurance if the cost was affordable.
There is some confusion around the cost of life insurance cover. Although half of uninsured parents said they did not have life insurance because of the expense, 54% admitted they did not know what the monthly cost would be. In fact, a healthy 30 year old could pay as little as £4 per month, with the average policy starting at around £8 per month*. It becomes more expensive to take out life insurance as you grow older; healthy 30 to 35 year olds pay on average only £8 per month for ten years of cover, compared to a healthy 40 year old who pays on average over £20, an increase in 150% over just five years.
The complex application process and lack of clear communication from providers around a policy’s benefits also appear to be putting off parents from protecting their loved ones. Some uninsured parents said that they did not understand how the product works and over a third (34%) admitted that they would be encouraged to take out a policy if the application process was simple and if the level of pay-out received in the event of their death was made easy and clear to understand.
When asked what would be the most important thing they would want their life insurance to cover in the event of their death, 34% said their mortgage, while 19% would want their family to maintain their current lifestyle and 16% would want the pay-out to provide a nest egg for their family at a later stage in their lives.
Jody Baker, head of life insurance at comparethemarket.com, said:
“For most parents, bringing up a child is more than enough to keep their days busy. They may not even have considered how debts including mortgages, loans and credit cards will be paid for, or how their current standard of living could be maintained if their household income fell or disappeared entirely. Many people take an “it will never happen to me approach”, but life insurance provides an important safety net in the event that your loved ones can no long longer rely on your income if something terrible should happen.
“It is particularly worrying that so many parents find the process of buying life insurance complex and off putting and that they feel the cost is beyond their means, when in fact a healthy 30 to 35 year old pays on average only £8 per month for ten years of cover. This sort of confusion leads to inertia which prevents people taking out protection; protection that really helps alleviate financial worries and gives peace of mind. Insurers clearly have to work harder to communicate the benefits of this product to customers and make the process as simple and easy to understand as possible.”
* Premiums data sourced from comparethemarket.com 2015 (full year)
Unless otherwise indicated, all data is sourced from comparethemarket.com.
About the Institute of Inertia
The Institute of Inertia, a partnership between comparethemarket.com and the University of Sheffield, launched in 2015 and looks at the psychology behind financial inertia to help consumers save wasted time and money.
The Institute of Inertia is a network of experts and academics led by The University of Sheffield’s Dr Thomas Webb, a specialist in consumer behaviour.
A programme of qualitative and quantitative research tranches inform the Institute of Inertia to help shape and test potential solutions to drive behavioural change.
For more information on the Institute of Inertia, please visit www.Instituteofinertia.org
About Meerkat Movies
Meerkat Movies is comparethemarket.com’s customer rewards programme. It was officially launched on 3 April 2015.
Meerkat Movies offers comparethemarket.com customers, who have made a qualifying purchase, 2 for 1 cinema tickets for a whole year from date of purchase, redeemable at participating cinemas every Tuesday or Wednesday.
You can only have one Meerkat Movies membership in any 12 month period. It can take up to 48 hours to activate your membership.
For more information visit http://www.comparethemarket.com/media-centre
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