For nearly three in ten (28%) women in the UK, the inability to support themselves or their families financially is their greatest financial fear. A new report from Aegon ‘Protection matters: does women’s financial planning match their priorities?’, which draws on the opinions of more than 2,000 women, found that nearly half (46%) believe it’s solely their responsibility to make sure that their family has enough income should the unexpected happen.
It’s abundantly clear how important family and financial security are to women. Twenty nine percent of mothers rank the financial security of their children as second only to their children’s health and happiness (56%) in their priorities, while for those without children, 42% place their partner as their top priority.
Despite these clear priorities, millions aren’t taking the necessary steps to protect themselves should the worst happen. Protection such as life insurance, income protection and critical illness cover can provide vital financial support in times of need. This can allow families to continue making their mortgage payments (and in some cases pay off or substantially reduce their mortgage debt), keep up with their day-to-day expenses and maintain as ‘normal’ a lifestyle as possible. Yet over half (51%) of women in the UK have no form of protection at all. This means there are some 13 million women who lack the vital safety net that could offer financial support for themselves, their partners and children in the event of death or if they’re left unable to work due to serious illness.
Cost is seen as the main barrier to women better protecting themselves and their families, with nearly half (48%) of women thinking that protection is too expensive. A fifth (20%) don’t see it as a priority and a further one in five (19%) think it’s a waste of money. This is despite the fact that, for a 35-year-old non-smoking female, a policy can cost as little as £7.01 a month,just a fifth of the average cost of a trip to the cinema for a family of four.
Nearly two in five (38%) women without protection say that were the worst to happen, they’d rely on their own savings if they couldn’t work for six months, but this itself raises a red flag, as the sums don’t add up. Sixteen per cent of women don’t have any savings at all, a further 16% think their savings would only last as long as six months and just 13% believe their nest egg would support them for a year or more.
As well as turning to savings, 35% of women would rely on their partner’s income to manage financially. However, nearly half (49%) of women rely on two household incomes to meet their day-to-day costs and other essential expenses, so if one of these incomes was reduced or lost completely it would undoubtedly lead to great pressure on the sole income in the household. Over a fifth (22%) would rely on state benefits provided by the government, which is likely to provide just a small portion of their usual income. For 17% of women, major budget decisions would need to be made in order to cope financially.
Stephen Crosbie, Protection Director at Aegon said “Protection is there to replace an individual’s income when unexpected events occur: in the worst case scenario this covers death, but it can also support when people are struck by serious illness. It’s an important safety net that can help meet a family’s monthly expenses, ranging from mortgage payments to the supermarket shopping. However, the reality is far too many women in the UK are putting themselves and their families at unnecessary risk by not taking steps to protect themselves, despite the pressure they feel to provide for and support their children. Many women cite cost as the reason for not buying protection, but £7.01 a month is a relatively low price to pay for peace of mind. There’s a clear opportunity here for the industry and advisers alike to raise awareness among women about the value protection can provide. Across the UK people insure their homes, their pets and their mobiles but overlook the vital component that funds all of their day-to-day spending – them. Instead, women expect to rely on savings but the sums often don’t add up with relatively few people having substantial cash savings to fall back on.
“There’s a gap in understanding that both providers and advisers need to work together to close, to make sure that people have a lifetime of financial security and don’t get a nasty shock at the worst possible time.”