Only a quarter (24%) of adults in the UK with children under 16 have any form of financial protection, a significant drop from 31% in 2013, according to the latest research from the Scottish Widows Protection Report. With over half (54%) of this group admitting that their savings would last just a couple of months if they were unable to work, a significant protection gap exists for families in the UK.
Almost half of households (46%) with children under 16 are now also reliant on two incomes, and a further 14% of this group state parents or grandparents are dependent on their income. It is likely that there would be real challenges for these households if one income was lost. Childcare costs are another area which can be impacted by the loss of one parent’s income, equally so if grandparents could not continue to provide support. With more parents working and increasing childcare costs, up 27% since 2009, 40% of those with children under 16 rely on their parents to help with free childcare.
While some Government support is available in times of need, the current state bereavement benefits and support 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 – particularly when it come comes to looking after their dependent children following the death of a parent.
People are realistic about the support available, with only 1% of those with children under 16 believing the state would look after their family if something were to happen to them. 45% of this group also believe that individuals should take personal responsibility for protecting their income through insuring against the unexpected happening to themselves or a loved one. This awareness needs to be galvanised into helping people take action.
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, whilst also relying on two incomes. However, many families in the UK, particularly those with dependent children, are worryingly under protected and the loss of one income could have significant long term repercussions for all generations.
“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. The industry also needs to continue to educate people about the importance of financial protection to help convert awareness into action.”