46 days – how long the average UK family could maintain their lifestyle if they lost their main income How long could you maintain life as you know it?

• UK breadwinners hope to leave a lump sum of £100,000 behind for their families – but a large amount do not have life insurance (47%)
• Post Office’s research identifies a number of ‘at risk’ groups – including millennials and retail workers
• Lack of understanding of and faith in insurance products found to be fuelling the nation’s lack of financial planning – Post Office spokesperson Rob Clarkson calls for the industry to engage with vulnerable groups

The average UK family could only sustain their lifestyle for less than two months – 46 days – if they were to suddenly lose their main income, according to new research from Post Office Insurance.

The research, which examined the financial stability of different types of people across the UK found that on average a monthly household income (£3,156 post tax) and available assets such as cashable savings (£10,741) would only sustain a family for a short time when faced with regular monthly spending (£1,313) and debt commitments (£8,759). 

Working families with parents in their 30s and 40s are particularly ‘at risk’. Though they carry less debts, and have more assets than some groups, research has shown that if they were to lose their income, their lifestyles would not be sustainable for more than a few days.

Despite these concerning figures, the research indicates that those earning the primary income in most families may not have a realistic expectation of their financial capabilities.One in four UK adults (24%) do not feel their household has a contingency plan in place if they were to lose their income for 4 weeks – despite the average family needing an estimated £2,428 a month to live on (or £1,484 for a single person). This lack of contingency plan increases to 34% of households if the income loss were to last for 6 months or more.

On average, breadwinners in UK families (individuals who earned more than 50% of the household income) hoped to leave a lump sum of over £100,000 for their families in the event of their death. Despite this only 47% of breadwinners had life insurance in place.

The UK’s financial plan

With statistics showing that families do not have a financial safety net – what are the barriers to long-term financial planning? While many people do not invest in insurance due to a perceived high cost (26%), Post Office’s findings indicate that people’s lack of planning may stem from anxiety when considering their family’s long-term financial future (19%).

Only one in four people feel their family’s financial futures are adequately protected (27%). In addition to this, most UK adults have not discussed the guardianship of their children (76%), their funeral wishes (63%) or how they would like their assets divided among loved ones (53%) in the event of their death; even fewer have a formal agreement in place for these considerations.

Steps that families feel they have taken to protect themselves include building a savings nest egg (19%) – with the average family savings standing at £7,258. One in 10 (12%) have also invested to protect their long-term future – with the average family having £3,483 in easily cashable investments.

Vulnerable groups

While UK families on the whole lack an adequate safety net, there are certain groups that are particularly vulnerable either due to a lack of cashable assets or low levels of income relative to their outgoings.

On average, vulnerable demographics demonstrated ‘negative resilience’ suggesting that they would not be able to survive without their continued income and may actually be living beyond their means currently - with their basic living costs exceeding their income. This follows findings by the Financial Conduct Authority (FCA) in late 2017, which found that half of UK adults (25 million) exhibited some sign of financial vulnerability and 4 million were in serious financial difficulty.

The most at-risk groups according to Post Office’s research included millennial consumers, those living in rental properties - both private and through a housing association -, those with a particularly low household income (in the UK’s bottom 20%) and workers in the retail industry.

Rob Clarkson, Managing Director of Post Office Managed Services said:“It’s concerning that so many people in the UK would not be able to maintain their lifestyle and provide for their families should their circumstances suddenly change.

“There is a common misconception that life insurance and critical illness cover can only benefit the very wealthy who have a large amount of assets but as this research demonstrates, many families could benefit from it, if only to protect their family’s day-to-day lives at a difficult time.”

The UK’s most resilient cities

Across the UK, the different cost of living challenges and differing value of assets such as property, means that financial resilience can differ greatly from city to city. Swansea citizens could sustain their lifestyles longer than the majority of people in the UK due to a favourable cost of living ratio but have relatively low levels of insurance – with only 31% of residents having life insurance and 17% having critical illness in place. Belfast families are the most likely to invest in life insurance (53%) and also could maintain their lifestyles for nearly four time the national average (190 days).

Glasgow, Liverpool and Bristol all raised concerns, with households in these cities showing a lack of resilience should a main breadwinner lose their income.

Levels of financial resilience across major UK cities

Rob Clarkson continued: “We all try not to dwell on our own mortality, however, I really hope that this research gets people to consider how secure they, or their families would be if their circumstances were to change or the worst were to happen.”

“As an industry, we need to question why the average family doesn’t see that life insurance can be one of the most cost-effective ways to plan for your family’s financial stability. Our research found that 25% felt they couldn’t afford it despite some policies costing as little as £7 a month. A further one in 10 don’t understand how the product works. At Post Office we are committed to helping as many people as possible understand the value of life insurance and in particular, reaching out to vulnerable groups who may need it the most.”

Find out how much you need to protect life as you know it by checking out the Post Office Life Insurance Calculator

Ends

Notes to Editors:

Opinium Research conducted online interviews with a nationally representative audience of 2,518 UK adults between 26^th January and 7th February 2018, all national average statistics are weighted to be representative. In some instances, certain demographic groups have been boosted in order to accurately ascertain their views.

The total amount of cashable assets households have comes to £10,741 (including cash savings and cashable investments). The average total debt that each household is in comes to £8,759. The average monthly household outgoings are £1,313. £10,741 - £8,759 = a household liquid net worth of £1,982. £1,982 / £1,313 = 1.51 months or 46 days that a household could maintain their lifestyle if they lost their main income.

The same calculation was run using the average figures from each respondents from each city.

For more information, please contact:

Lily Cunningham, PR & Campaigns Manager Post Office

Lily.Cunningham@postoffice.co.uk

Twitter @postofficenews

Lansons

PostOffice@lansons.com

0207 566 9702 / 0207 294 3638 / 0207 294 3643