- Households left without a woman’s income only able to pay bills for 7 months
- One in three women has life insurance cover and 7 per cent has critical illness
- 25% would rely on benefits if their partner couldn’t work for six months or more
Three-quarters of households in the UK would only be able to pay their bills for seven months if they lost the income of the woman in the family due to illness or death, new research has shown.
Yet just one in three women has any insurance protection in place to cover their families if they could not work or died, exposing a big gap in cover should the worst happen.
The main reason for not having protection in place is that it is not seen as a financial priority.
Cover gap: One in three women has life insurance cover and 7 per cent has critical illness
On top of the financial hit, the research shows that on average women spend at least 23 hours a week on childcare and household chores, which their families would struggle to afford or cover.
Without a protection policy in place, many women are putting themselves at risk of serious financial difficulties if something were to happen, the exclusive research from Scottish Widows shows.
The insurer asked 2,606 women about their financial situation. Of those, 31 per cent had a life insurance policy and only 7 per cent had a critical illness policy.
Of those without a policy, the main reasons for not taking one out was it not being a financial priority and women not thinking they needed one.
When asked what they would do if their partner was out of work for six months, 25 per cent said they would have to rely on state benefits to pay for household bills and 54 per cent said they didn’t have a will in place.
The women in the survey were also asked about their savings and 68 per cent said they weren’t able to save for the long term, because they had other things to pay for.
Protection policies are designed to cover you in times of hardship and to make sure there is enough money available to cover costs such as mortgage repayments.
There are lots of difference policies available with life insurance, income protection and critical illness being the most well known.
The price you pay for protection cover depends on your personal circumstances, with the cheapest prices reserved for younger people in good health who are less likely to die or become seriously ill.
Households left without a woman’s income would only be able to pay bills for seven months
Prices also vary depending on the insurer – and as there are lots of options in this market it’s worth getting quotes from a few different firms if you’re thinking about buying a policy.
Jackie Leiper, protection director at Scottish Widows, said: ‘One of the most important things a woman can give her family is security, but financial protection is still too far down the priority list because women simply don’t recognise their own value.
‘It’s crucial that everyone – no matter what stage of life they’re at – considers whether they have the right protection in place to ensure their loved ones aren’t left coping with financial strain on top of emotional trauma if the worst were to happen.
‘And that applies to working women and full-time mums alike. We all need to recognise the monetary value of women’s time and effort in the household, and to safeguard it accordingly.’
The research also highlights the change to the benefits available for those who lose a partner. The Bereavement Support Payment replaced the Bereavement Allowance, Widowed Parents Allowance and the Bereavement Payment earlier this year.
It’s available to anyone whose husband or wife died on or after 6 April 2017 and it is a lump-sum followed by 18 payments, but this is less than the previous payment system which paid out monthly sums for 52 weeks.
Protection insurance essentials
Life insurance: Life insurance pays a specified sum if you die.
There are three types of life insurance – level term, decreasing term and whole-of-life. Level term is taken out for a specified period of time and if you die within that time a set lump sum will be paid.
With decreasing term insurance, which tends to be cheaper, the sum the insurance pays will fall over time.
Whole-of-life insurance pays a guaranteed amount when you die and there is no specified term. However, the premiums for this type of insurance can change. A proportion of the premium you pay is invested and its growth helps keep the premiums low.
Critical illness insurance: Critical illness insurance pays out a tax-free lump sum on diagnosis of a range of conditions. All insurers must cover seven core illnesses, including cancer, heart attacks and multiple sclerosis.
Injuries that leave people permanently disabled are also covered. Common exclusions include HIV/Aids, self-inflicted injuries and those caused by drug abuse.
The cost varies widely. The older the policyholder, the more they will pay, as will those already in poor health or those who smoke.
Income protection: This pays a tax-free income if you are unable to work due to illness or unemployment. Up to 70 per cent of income can be covered, depending on the insurer, and you’re covered until retirement.
Courtesy: Daily Mail Online