75% of families with young children have failed to protect their finances

29th August 2014

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The number of parents of young children failing to financially protect their families has increased significantly as over half admit their savings would not last just a couple of months if they could not work.

A survey by insurer Scottish Widows has found just a quarter of adults in the UK with children under the age of 16 have any form of financial protection, a significant drop from 31% last year. This means that three quarters of families would be left struggling to pay the bills if one parent lost their job or could not work for health reasons.

To compound this problem, 54% of this group admitted that their savings would only cover their expenses for a couple of months if they were out of work – revealing a protection gap for families in the UK.

With the cost of living rising faster than wages, almost half (46%) of households with children under the age of 16 rely on two incomes, meaning the loss of just one income would be a blow.

Esther Dijkstra, head of protection at Scottish Widows, said: ‘We can’t ignore the financial pressures currently being faced by a large number of UK households, with families often supporting children and parents at the same time, while also relying on two incomes.

‘However, many families in the UK, particularly those with dependent children, are worryingly underprotected and the loss of one income could have significant long term repercussions for all generations.’

With intergeneration family support becoming more normal, with the use of grandparents for childcare, the loss of support from a family member could also have repercussions for childcare costs.

Dijkstra said that while there is government support available in times of bereavement, such as bereavement benefits, the system is based on marriage or civil partnerships ‘and doesn’t yet replicate the modern family we see today’.

Unmarried couples and long-term partners are left in a ‘welfare grey area’.

‘It’s not always the easiest topic to discuss but it is one people should make time to think about and set up robust protection that adequately supports their family and safeguards their future,’ said Dijkstra.

 

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