“If I had my way, I would write the word “insure” upon the door of every cottage and upon the blotting book of every public man, because I am convinced, for sacrifices so small, families and estates can be protected against catastrophes which would otherwise smash them up forever.
It is the duty to arrest the ghastly waste, not merely of human happiness, but national health and strength, which follows when, through the death of the breadwinner, the frail boat in which the family are embarked, flounders and the women and children and the estates are left to struggle in the dark waters of a friendless world.”
Sir Winston Churchill, Manchester, 23 May 1909
Protection is the bedrock of financial planning. It gives families confidence that they can build their futures without fear of the unknown.
Four in ten families have life cover
UK households owe more than £6,000 on average in unsecured debt
It’s estimated that half of UK mortgage holders do not have life insurance
Aviva first began working in partnership with schools to raise awareness of personal finance in 2007
7% of UK employers offer protection income to their employees
We’re taking great strides in breaking the taboos around life insurance, critical illness cover and income protection. By creating bold TV and radio advertising campaigns, Aviva has helped to raise awareness of family protection - we don’t necessarily want to think about the ‘what ifs’ but it’s vital that we do.
Making sure our families are protected against the worst that life can throw at us should be a priority for us all. Human nature tends towards inertia when it comes to our finances, often excused by thinking that it won’t happen to us. Sometimes we need encouragement to act in our own best interests - a fact recognised by a move towards auto-enrolled pensions and proposed free financial guidance for all at retirement. Without this help we can leave ourselves exposed to risks that could be prevented with a little support and forward planning.
At Aviva we care passionately about our customers. We see first hand the devastation caused by bereavement or serious ill health, and the relief afforded by financial immunity to these shocks. We believe that it should be the norm that people take active responsibility for their own financial futures and that of their families. To achieve this we have a duty to help educate consumers about the financial risks they may be taking – often inadvertently - by not making a plan for the ‘what ifs’. By raising awareness of the need for family protection, we can help to improve families’ financial resilience and create peace of mind.
In our report Rethinking Protection, we set out a series of proposals that we believe could help increase awareness of these issues and encourage people to take action and make appropriate plans. In the report we cover the following in detail:
1. First-time parents should be given information about protection when they have a child: Only one in five families reviews their need for life insurance, income protection or critical illness cover when a new baby is born.
2. Discussing protection should be compulsory as part of the mortgage sale process: Mortgage advisers should be required to discuss protection needs when carrying out a mortgage sale, as part of a duty of care to new homeowners who are taking on a significant financial burden.
3. The level of death benefit needs to be explained to all, so that everyone can make a decision about how it fits within their protection needs: From April 2016, the current system of bereavement benefits will be reformed. Aviva urges the government to support the reform of bereavement payments with an engagement campaign that encourages families to understand the financial implications of death.
4. Protection should be a required discussion point when determining details of a divorce / separation settlement: Only one in four of the families who receive support for their children from a former partner know for definite that this partner has protection in place, therefore safeguarding the payments they receive. Aviva believes that couples who divorce or separate should be required to discuss protection issues as part of any financial settlement.
5. Protection is a foundation skill in understanding finance and as such should be a key module in personal finance education: From September 2014, personal finance education will be part of the national curriculum in secondary schools for the first time. We believe financial protection should be prioritised within the lesson planning process.
6. Income protection could be offered through a workplace scheme: Employers have played a crucial role in helping millions of consumers to save for the future through pension auto-enrolment. There is now an opportunity to build on this success, by encouraging employers to offer other financial products, such as income protection.
Louise Colley, protection director for Aviva says: “Protection is the bedrock of financial planning and gives families the confidence that they can build their futures without fear of the unknown. We believe every family deserves to understand the financial risks they face and the importance of protection. By working together, the government and the industry can make sure that families have the stability they need.”