A major new report by Aegon UK on how women aged 25 and over, and mothers of under 18 year olds in particular, are protecting the things most important to them, finds that despite around seven in 10 (71%) mothers seeing the financial security of their children as among the top priorities in their life, almost half (49%) have never discussed with their next of kin what would happen if they died.
This silence is serious, especially as 67% of women, and almost three in four (72%) mothers, now work to support their growing families, and seem to be underestimating their financial importance to the family unit. Aegon’s research reveals that nearly three in five (57%) women aged 25 and over don’t have any form of protection cover, and almost one in three (28%) of working women would need to rely on State support if they were unable to work for six months. Worryingly, more than half of women (55%) have no idea how much State support their family would receive if they fell ill, with most completely unprepared for the projected £21,100 annual income shortfall.
When asked to think through the consequences of being out of work for six months, over one in four (27%) of working mothers surveyed admitted that heating the home would have to be given up, and 23% of those paying childcare would have to stop all paid childcare, as they’d have nobody to help them pay these bills. One in 20 (5%) working homeowners would consider selling their home to pay for general living costs.
What really matters to women?
Children are resoundingly the top priority for mums with children under 18. When asked what they considered to be priorities in their life, the health (94%), happiness (91%) and financial security (71%) of their children all came up as the most important. Yet currently, more than two in five (41%) don’t have any form of protection should they die or be rendered unable to work.
For stay at home parents, only around one in 10 (9%) has critical illness protection, making them half as likely as mothers of children under 18 (20%) to have this vital cover. If those at home are unable to look after the kids, the potential added cost to the working parent would be £7,549 per year (the average fees for one child in part-time nursery and another in an after-school club).
Despite this, when given £180 to spend on anything they liked, only two per cent of mums of children under 18 opted to spend it on a year’s life insurance at £15 a month. One in four (25%) would put the money toward a holiday, one in six would splurge at a restaurant (16%) and another one in six (15%) would treat themselves to a new outfit.
The cost of the crisis on family
Despite two in five (40%) working women, or just over a third of mums (34%), claiming they’d rely on their savings to weather the financial storm if they were unable to work for six months, nearly one in three (30%) admits to having absolutely no savings whatsoever. A staggering seven in 10 (70%) claim they wouldn’t last six months living off their savings were something to disrupt their regular income, and only 13% say they’ve enough money saved away to survive for more than a year.
Almost one in three (28%) working women admit they’d need to rely heavily on State support if they were unable to work for six months. Aegon’s research also found that more than half of all women (55%) have no idea how little this State support pays out, with one in four (25%) believing it to be more than £87.55 a week, and a further 30% admitting they just didn’t know. Against a woman’s average annual income of £23,589 a mother would face an annual pre-tax shortfall of £21,137.50.
For two in five (41%) working women, an alternative recourse would be major cutbacks to their living expenses if they were unable to work for six months. Around two in three (69%) would give up on holidays, over half (55%) would cut down on shopping trips and nights out with friends (53%), and more than one in three (36%) would knock TV packages on the head. Worryingly, more than one in four (27%) working mothers with children under 18 admits that heating would have to be given up, and a further 14% would have to stop all paid childcare. Six months of not working is all it would take for one in 20 (5%) homeowners to consider selling their home to pay for general living costs.
Silent and unaware
Nearly half (49%) of mothers with children under 18 admit they’ve never had a single conversation with their next of kin about what would happen if they died. This is even higher for stay at home parents of which 58% haven’t spoken to those closest to them.
This silence is perhaps one of the main reasons for the protection gap, but those women without protection cover also cite affordability (37%) as a key cause. Despite seeing their children’s financial security as a top priority, more than a quarter (26%) don’t see life or illness insurance as a priority, and more than one in 10 (12%) admit they’ve simply never considered it. Almost one in five (18%) also think that insurance providers can’t be trusted to pay out on their policies, despite the fact that insurers in the UK pay out 97% of claims (ABI, 2013).
Dougy Grant, Protection Director, Aegon UK said:
“Whether it’s a reluctance to discuss the unimaginable, a feeling that protection isn’t affordable, or simply a lack of awareness about the services on offer, there are plenty of reasons why women aren’t insuring themselves for the benefit of their family. There’s a clear disconnect between the peace of mind of protecting our most pressing priorities and our behaviour as a consumer.”
“At Aegon we want to see more women and their families protected from the worst hands that life can deal, and know we have our part to play in making these options both easier to understand and affordable. Aegon’s ambition is to get the UK ready for retirement. Being prepared for retirement is about more than saving - it’s also about protecting what you have and planning for all eventualities.”
Sarah Pennells, Consumer Expert and Editor of SavvyWoman.co.uk, added:
“While women are increasingly in charge of family finances, they are falling behind when it comes to thinking about what would happen to their finances if they could not work or couldn’t take care of their children. I was struck by the fact that almost three quarters of mums say that the financial security of their children is a top priority, but one in three has no savings and four out of 10 have no protection cover.”
“Preparing ahead for long-term illness, or worse, isn’t just about assessing how much savings you have or whether you should consider taking out a protection policy. It’s also about discussing who you‘d like to manage your finances for you if you’re unable to do so; who should look after your children if both you and your partner die and what arrangements need to be made after your death.”
“Aegon’s report shows that half of mums with children under 18 haven’t talked about their death with their closest family. This type of conversation is never going to be easy, but talking about it and putting plans in place will ultimately make things a little easier for your family, should the worst happen. It’s too important for us to ignore.”
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