New parents fail to protect their family's future with life cover

Article date: 1 March 2012

  • Doting parents admit to wasting money while skimping on life cover
  • Expectant parents spend £1,370 preparing for baby - but 60% waste money
  • Four out of 10 new parents start a savings account for their child’s future
  • Yet fewer  than one in five take out life cover to protect their finances in case of the loss of a parent

Four out of five new parents are risking their children’s financial futures by skimping on life cover, according to new research from Aviva.

The survey of 1,500 recent parents1 in the UK reveals that while two out of five (40%) start a savings account for a new arrival, fewer than one in five (18%) take out life insurance. This is despite the fact that some new parents clearly do consider the difficult "what if?" scenario, with a quarter (25%) stating they had chosen a guardian for their child if they were to die.

The survey also reveals that even before the baby is born, expectant parents will spend on average £1,3701 on essentials such as pushchair, baby clothes, cot, bedding, car seat and nappies. With more than 300,000 babies born to first time parents in the UK each year this adds up to more than £425 million1. In addition:

  • More than a quarter of expectant/new parents (27%) said they bought or changed their car, with an average spend of £2,658;
  • And a quarter (25%) moved to a bigger house with an average spend of £20,813.

Typically, new parents think nothing of spending on baby goods, yet an overwhelming 60% of parents admit that looking back, there were items purchased that they either didn’t use or could have done without.

Aviva data shows that two-thirds (60%) of families have no life insurance in place and the average family only has £928 in savings2 which, without any other income, would last them around half a month. Yet if an "average" family paid £10 a month on a standard life insurance policy for both parents for 18 years, they could receive more than £128,000 tax-free if a parent died or was diagnosed with a terminal illness within that period3.

By comparison, investing £10 a month into a high-street savings account over the same period would amount to £2859.404 based on an interest rate of 3% - little more than the average UK family’s monthly income of £2,0662. Significantly, the size of the savings pot depends on how long people have been saving, while protection cover means the sum is guaranteed as soon as the policy is in force.

Louise Colley, head of protection marketing and sales for Aviva said: “Every parent wants to splash out to prepare for the exciting arrival of a baby, so it’s no surprise that the costs can stack up. But within the checklist of essential items, we’d urge parents to consider putting a small amount aside each month to protect their family’s financial future, if something unexpected were to happen to either parent. It should be considered just as much an essential as a buggy or a cot.

“We don’t think twice about taking steps to protect our children physically within the home, but not enough action is taken to safeguard the financial wellbeing of our families. While it’s understandable that people want to save for their children’s futures, parents need to ask themselves whether they would have enough money to meet their monthly outgoings if they were suddenly to lose an income.”

Aviva offers free life cover of £10,000, per parent, per child to new parents in the UK who register before their baby is six months old, to run until the child’s first birthday. New parents can register for the Aviva offer either online by visiting www.aviva.co.uk/life by phone on 0800 404 6465 or by speaking to their financial adviser.

Aviva’s advertisement to raise consumer awareness of the importance of protection, featuring Paul Whitehouse is currently being shown on UK television.

Methodology:

1 Aviva research, conducted by One Poll, among 1,500 mothers with children under five in January 2012. The average "first baby spending" breakdown is revealed as follows:

 

Pram/pushchair          

Cot/mattress/cot bedding

Furniture for nursery

Newborn baby clothes

Decorated nursery        

Maternity clothes

Toys/play gym                       

Car seat

Nursing chair

Special treatments/toiletries for mums-to-be

Moses basket/bedding           

Baby bouncer/swinging chair

Nappies                       

Breast pump    

Bottles/steriliser         

Mobile

 

£203.98

£139.64

£130.75

£115.45

£115.01

£102.83

£100.79

£88.20

£79.91

£68.48

£65.09

£60.06

£34.97

£21.28

£21.03

£20.94

Total

£1,369.41

The figure of £425 million is derived by multiplying the number of babies born to first-time mums in 2010 (310,862 - source ONS) by the average amount spent per baby as detailed above.

2 Source: The Aviva Family Finances Report, January 2012.

3 Aviva Standard Life Cover on a level term plan for a husband and wife aged 29 (the average age of women having a baby in the UK), non-smokers, with monthly premiums of £10 over an 18 year period, information correct on 28 February 2012.

Amount of cover purchased: £128,173 if either parent were to die or be diagnosed with a terminal illness within the term of the plan. Aviva life insurance includes terminal illness benefit. This means we pay the policyholder a guaranteed lump sum if he or she is diagnosed with a terminal illness and is not expected to live more than 12 months (assuming their plan has at least 18 months to run).

4 Source: monthly savings calculator at thisismoney.co.uk http://www.thisismoney.co.uk/money/saving/article-1633419/Monthly-lump-sum-savings-calculator.html

-ends-

If you are a journalist and would like further information, please contact:
Sarah Poulter 
Telephone: +44 (0)1904 452828 / +44 (0)7800 691569 
Email: sarah.poulter@aviva.co.uk

Melissa Loughran 
Telephone: +44 (0)1904 452791 / +44 (0)7800 691947 
Email: melissa.loughran@aviva.co.uk

Notes to editors:

About Aviva:

Aviva is the world’s sixth largest* insurance group.  We provide 44.5 million customers with insurance, savings and investment products with total worldwide sales in 2010 of £47.1 billion**.
  
We are the UK’s largest insurer with over 14 million customers. Our combination of life, health and general insurance is unique in its scale and breadth in the UK market. Customers can choose to buy our products through intermediaries, our corporate partners or from Aviva direct and we have become the partner of choice for many of the UK’s biggest organisations. 
 
We are ranked as one of the UK’s top 10 most valuable brands and Aviva plc are in the top 10% of socially responsible companies globally in the Dow Jones Sustainability World Index.  In 2010 we invested £4.3 million into our communities in the UK, which included 1,500 Aviva volunteers giving 24,000 hours for good causes. In addition, our employees gave £600,000 through fundraising and donating. Read our corporate responsibility report at www.aviva.com/2010cr.

Aviva is working in partnership with Railway Children through the Aviva Street to School programme to get children living or working on UK streets back into everyday life. Find out more at www.aviva.co.uk/street-to-school.
 
The Aviva media centre at www.aviva.com/media includes company information and a news release archive.
 
For broadcast-standard video, please visit www.aviva.com/media/video/.
 
Follow us on twitter: www.twitter.com/avivaplc
 
*based on gross worldwide premiums at 31 December 2010.
**at 31 December 2010.

Back to top