Aviva Family Finances Report found UK families are putting luxuries ahead of protecting their loved ones financially
Aviva has just published its findings from their latest Aviva Family Finances Report. The report found UK families are putting luxuries ahead of protecting their loved ones financially. Families put luxuries like satellite television (50%) before life insurance (40%). The report also found families are more likely to have insurance for their mobile phone (14%) than insurance that will protect their family financially if they were to suffer a critical illness (13%).
Similarly, more people have taken out an extended warranty on electrical items (13%) than have income protection insurance, which would potentially pay an income for life should they be unable to work as a result of an accident or illness (10%). When you consider what life would be like without you monthly wage compared to a cracked mobile phone screen, it raises the question if there is a lack of understanding about income protection and critical illness insurance.
Lack of understanding
The report revealed that the majority of UK families are avoiding the issue of what they would do if something happened to an income earner, because they find discussing their finances and mortality ‘uncomfortable’. This was in spite of the financial worries that could be caused by not having protection, exacerbating emotional distress at a difficult time.
More than a quarter (27%) of families admitted they would not want to discuss their debts with their family, and 24% would not even discuss their general finances. The only topic that makes families more uncomfortable than finances is ‘sex’ (56%).
As a result, Aviva claim many families ignore the issue and fail to appreciate the value of protecting their family, compared to spending on other items.
Looking at the monthly sums paid for different products and services, families pay almost double the amount for satellite TV than they do life insurance, and they pay only a small amount less for mobile phone insurance, regardless of the huge difference between what these plans are worth in the event of a claim. Despite this, 27% of families said they thought a satellite TV package was worth spending money on, compared to just 3% who said the same about a life insurance policy.
Families plan to get their finances in order
The impact of inflation, pay freezes, and benefit cuts has caused UK families to reevaluate their financial priorities for 2012, and the two most important measures they plan to take this year are cutting back on their spending (39%) and paying off their debts (35%).
However, there is still a lack of understanding about the value of protecting their families financially, as more families are prioritising booking their annual holiday (21%) than are planning to buy life insurance (3%).
Families questioned in January 2012 for the Aviva Family Finances Report said they paid the following average amounts each month:
- Satellite TV package £35.75
- Life insurance £20.88
- Critical illness insurance £20.72
- Home internet package £18.89
- Income protection insurance £18.67
- Pet insurance £16.60
- Mobile phone insurance £12.33
Louise Colley, head of protection sales and marketing, Aviva, says: “No-one likes to dwell on poor health or mortality, but by denying that illness – or worse – is even a possibility, people are stopping themselves putting measures in place to protect their loved ones. Too many people assume that someone else will step in and look after
their families if they weren’t there to provide for them, but the reality is very different.
“People need to ask themselves just how they would pay for their accommodation, their food, and all the other costs of living, should they suddenly lose an income. While no-one likes to think about ‘what ifs’, by not even considering these scenarios, people could be putting the future financial security of their families at unnecessary risk. So many customers report feeling ‘peace of mind’ when they take out life cover, knowing their affairs are in order, so we’d urge families to overcome their taboos and put protection in place.”