Protection: Single parents take risk with life insurance

Posted on July 7th, 2012 | Categories - News

A new survey has shown that single parents are less likely to have protection in the event of their death, or serious illness.

The survey, by Sainsbury’s Life Insurance, found that less than a third of single parent families had Life Insurance.

The same was true for households with unmarried parents, where only 31% had Life Insurance, and also for sex parents where the figure falls to 23%.

In contrast, 50% of married couples have some form of Life Insurance or Critical Illness Cover.

Whilst single parents may find it harder to find the spare income to pay for these types of insurance, it is unclear why the take up rate for unmarried couples and same sex parents should be lower than for married couples.

Life Insurance to protect families

Financial experts point out that having some form of Life Insurance and cover in the event of illness is vital for the financial stability of the vast majority of families.

There are various options for parents who want to protect their family. Life Insurance is self explanatory, usually paying a lump sum in the event of death and generally comes in two forms, Level Term Assurance (LTA) and Decreasing Term Assurance (DTA). LTA is usually used for general family protection, whereas a DTA is used to repay a capital repayment mortgage in the event of death.

Critical Illness Cover pays out a lump sum if the person insured suffers a serious illness and Income Replacement or Permanent Health Insurance (PHI) pays out a monthly income in the event of ling term illness.

Helen Williams, head of Sainsbury’s Life Insurance said: “Worryingly, our research suggests modern family units are much less likely to protect their dependants with life insurance or critical illness cover than the traditional notion of a stereotypical family.”

Williams continued: “Whatever the make-up of your family, it’s important to ensure you and your dependants are financially protected. Having life insurance and critical illness cover gives you peace of mind that if you or your partner dies or cannot work due to illness, you could have one less thing to worry about at a difficult time.”