Life insurance no longer a priority

Posted by Sam Twyford in Credit Crunch on 8 May 2013 - Sam is a Product Manager at checkmyfile

Families are failing to protect themselves against financial hardship should the main household earner lose their job or become ill. From a new study it is apparent that life insurance policies are becoming a less of a priority compared to other household insurances.

The findings from Scottish Widows found that just 37% of adults had taken out life insurance, 9% opted for critical illness cover and only 5% of working adults had taken out income protection insurance.

This means that a staggering two-thirds of people do not have life assurance. Many families would face financial hardship if a working parent was to die or become too ill to work. Just over half of the UK population are over reliant on one income to make ends meet, meaning that families are both under-protected and under-prepared for a worst case scenario.

With the country still in a recession and with every penny being stretched, the 15 million adults who currently can't afford to save each month don't have any finances to fall back on.

Katya Maclean of ¬Scottish Widows says, “No one likes to think about the worst happening, but if it does, knowing that you and your family have a financial safety net can make all the difference in a difficult situation.”

The report found that many people are more willing to insure tangible items such as mobile phone and household goods over their income. The majority of people prioritised items such as having a car, broadband and a mobile phone, as compared with taking our life cover or to protect their finances in the event of a job loss.

In most cases, when purchasing a property, borrowers are advised to take out some sort of life insurance. A shift in home-ownership trend, with private renters increasing by nearly 25% since 2008, and with over half not expecting to ever purchase their own property, life insurance policies at present are not highly sought after.

Sam is a Credit Analyst at Checkmyfile, has a degree in Business Studies and is an Associate of the Institute of Credit Management. He can be contacted at sam.twyford@checkmyfile.com

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