Cover gap as families rely on single income
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Aviva has warned that families are increasingly relying on a single income and many do not have protection in place.
Aviva’s latest family finances report, published last week, says in the second quarter this year, 2.1 million women were looking after their family rather than working, up from 2.07 million in the third quarter last year.
The survey of 6,000 families shows only 40 per cent have life insurance, 15 per cent have critical-illness cover and 10 per cent have income protection.
Over half of respondents say in the event of losing an income, they would cut spending. Twenty-eight per cent would look to state benefits and 25 per cent would use their savings.
However, a bereavement payment from the Government pays a one-off tax-free lump sum of £2,000, the equivalent of one month’s income for the average family. Bereavement allowance pays up to £100.70 a week. For those unable to work due to illness or injury, employment and support allowance offers up to £67.50 for the first 13 weeks and £99.85 a week after that.
Head of protection Louise Colley says: “Some families are having to decide whether it pays for both parents to work or if one should take care of the children. This can make economic sense but it means they will be reliant on one income, which is a potentially vulnerable position.”
Plan Money director Peter Chadborn says: “The move to one income is driven by the need to reduce outgoings, so it comes as a shock to clients when an adviser tells them they need to increase their outgoings to spend more on protection.”
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