Protection matters

For financial advisers only

Does women’s financial planning match their priorities? 

While women still agree their top priorities are their children’s health, happiness and financial security, there are still many who are ill-equipped to make sure that financial security in the event of serious illness or death. 

Our latest research provides an invaluable insight into the levels of protection among working women and female business owners, and their attitudes toward this invisible financial safety net. It presents a number of key learnings – all of which tie back to the need for greater awareness of protection among this audience.

What do your clients value most?

Their house, possessions, family? Of course it’s their family – but do their protection priorities tell a different story?

When it comes to unravelling the reasons why women are reluctant to buy protection, the majority state the cost of protection as the main deterrent1. 48% of women say that they can’t afford it1, which rises to 53% among mothers1. Concerningly nearly one in five (19%) women say they don’t see the value of protection and that it’s a waste of money1.

However, we don’t know what’s around the corner – and the value protection can bring to a family is incalculable. 

Your clients could get £90,000 life protection for as little as £7.012 a month - a fraction of the cost of eating out in a month or going to the cinema. With the average bottle of wine costing £5.393 – for just a little bit more, your clients can make sure their bills and mortgages can be paid, their children’s’ lifestyles are protected and their businesses can continue in difficult times. 

Family income benefit with or without critical illness is an alternative to, and can be cheaper than, normal life insurance – and could be more suitable if you have a young family. 

Overcoming the objections – View your toolkit here

Sources
1Protection matters research, Aegon, October 2016

2Aegon, based on £90,000 life protection for a 35-year-old woman over a 25-year term, October 2016.

3Average retail price of a bottle of wine according to Bibendum (2016) x4.

It’s all too easy to think that the worst won’t happen – and for many this is true. But in 2015, there were over 158,0004 protection claims in the UK – making it clear there are a significant number of people finding themselves in need of support.

Over half (51%) of the women we surveyed had no protection5. No insurance at all in place to cover themselves against illness, accidents or death. And the figures were bleaker for businesses, with 60% telling us they had no protection cover to allow the continuity and succession of their business5

And while two in five women (42%) say they’d rely on their own savings if they couldn’t work for six months5, the reality is that only 13% of women think they have enough savings to manage financially for a year or more5.

Setting this against a backdrop of increased costs as a result of sickness – Macmillan Cancer Support research suggests it costs an additional £570 a month if you have cancer6 - the harsh reality is your clients' savings might not last as long as they think.

We paid £114.9 million in life and critical illness claims in 2015 and cancer was the main reason for us paying a female life protection claim. 

No-one likes to think about it happening to them.  But life is unpredictable. However, having the right protection in place means that bills and mortgages are paid, children’s lifestyles are protected and businesses can continue in difficult times. 

Overcoming the objections – View your toolkit here

Sources

4Industry protection claims figures 2015, Association of British Insurers and Group Risk Development, June 2016.

5Protection matters: does women's financial planning match their priorities?, Aegon, 2016

6Cancer’s hidden price tag: Revealing the costs behind the illness, Macmillan Cancer Support, 2013. 

With low levels of, and in some cases no protection in place at all, where do women expect to turn if the worst does happen?

Without the financial safety net that protection provides, women have little option but to turn to their savings, the State, and, in some cases, family and friends, to provide help when things don’t go to plan.

Interestingly, 49% of women rely on two incomes coming into the household to meet day-to-day costs and other essentials7. But what would happen if one of these incomes stopped – due to ill health or death?

And while two in five women (42%) say they’d rely on their own savings if they couldn’t work for six months7, the reality is that only 13% of women think they have enough savings to manage financially for a year or more7.

Women think it costs £1,251 to run a household for a month7. But new research has shown that it costs, on average, £1,6348 a month. This means women could face a potential monthly shortfall of £383 or £4,596 a year - while running the risk of eating into their savings quicker than they may have planned.

So how do women balance family life with household bills if either they or their partner becomes ill or unable to work. Use our Personal or Business Liability audits to help them understand their personal and business protection needs. 

It’s vital women understand the value of protection, the true cost and the options they can afford, as well as the actual level of government support available. 

Protection truly is an invisible safety net that they can use to protect themselves, their family and their business.

Overcoming the objections – View your toolkit here

Sources

7Protection matters: does women's financial planning match their priorities?, Aegon, 2016

8More Th>n Cost of running a home report 2016.

Aside from turning to their savings, over a third (35%) of women would turn to their partner’s income for support and 22% would rely on the government.

The majority of women with children told us that the health and happiness of their children was their top priority. Therefore, it’s a worry to learn that 16% of them assumed that the government would help them pay for childcare if they were unable to work.

The reality is government support is there, but it’s unlikely to provide a comfortable standard of living and while there’s support in terms of long-term sickness – it’s rarely anywhere close to what the average family needs to cover their usual day-to-day costs.

Use our Personal liability audit(Opens new window)(Opens new window)(Opens new window)(Opens new window) as a tool with clients to help them understand how little the State will actually give them. 

Unfortunately, the picture for business owners was just as concerning. 

  • 45% would rely on their savings;
  • 42% would rely on their partner; and
  • 19% would turn to the Government for support.

Looking at savings in particular, 13% of female business owners thought their savings would last a year or more, however, 22% feared savings would only last between one and three months. Use our business protection case study videos(Opens new window)(Opens new window) and our business liability audit to help business owners understand the need and importance of having business protection cover in place.

Our findings highlight that women – and in particular those who own a business – don’t  understand what State benefits they’re entitled to and how much these pay in reality. 

We need to work together to close this gap in understanding to make sure that families don’t get a nasty surprise at the worst possible time.

Overcoming the objections – View your toolkit here

Source: Protection matters: does women's financial planning match their priorities?, Aegon 2016

You’re clients are financially secure. They’re healthy, their kids are healthy, and they’ve planned their holiday – life is good. Bottom line, they’ve told you they don’t need to think about protection insurance as they don’t need it. However, our research shows that the reality is there’s a high chance they do.

If your clients were to lose their income suddenly and unexpectedly, would they be able to continue to support their dependants and wider family?

For the majority of women with children in the UK, their main priority in life continues to be the health and happiness of their children (40%), followed by their children’s financial security (20%). And when forced to confront their greatest financial fears in life, a woman’s greatest worry is that they won’t be able to support themselves or their family (28%).

This may seem an obvious response as parents will understandably want to provide the best for their children, providing a secure and safe future for them. However, given that family and financial security rank so highly for women, it’s worrying that our research reveals that half (51%) of UK women don’t have protection in place for them or their families.

By having protection in place, they can make sure that, if the worst does happen, their families and dependants will continue to be financially secure.

Overcoming the objections – View your toolkit here

Source: Protection matters: does women's financial planning match their priorities?, Aegon 2016

Two in five (40%) women are now the main breadwinners in their households.

Source: Protection matters: does women's financial planning match their priorities?, Aegon 2016

There are currently 14.53 million9 women in work in the UK, the joint highest level since records began in 1971. The growing importance of the female workforce is highlighted in our new research which finds two in five (40%) women are now the main breadwinners in their households10

However, 43% of these female breadwinners have no financial protection policy in place10. This means there are over 6 million11 working women whose family and business finances would be severely tested should the unexpected happen. This lack of protection cover comes despite the majority (62%) of these households relying on one income to meet day-to-day living costs10

As the number of female breadwinners rise, the importance of protection insurance rises. So why do so few have protection plans in place? 

Life is unpredictable and while most people don’t want to consider it – illness, accidents and death do happen. Consider discussing the following points with your clients:

  • Buying a house - Have you thought about who’d pay your mortgage if you died prematurely or became critically ill and couldn’t work?
  • Getting married - Would you be able to cope financially if your partner’s income was no longer available due to death or illness?
  • Protecting your family - You might have some protection in place to cover your house and possessions. But what about your most valuable asset – you and your family?
  • Going through a divorce - If you’ve been awarded a maintenance payment, have you thought about what would happen if you – or the maintenance payer – fell critically ill or died?
  • Stay-at-home parents - would your family be able to cope financially if you were unable to look after your children or your partner’s income was no longer available, due to death or illness?
  • Business owners - have you considered whether your business could continue to trade or would suffer financially if it lost a key employee? Would it have the necessary cash flow to replace any loss of profit/repay any outstanding loans?

A serious illness or unexpected death can turn life as we know it on its head. For these female breadwinners - supporting themselves, children, elderly parents or other relatives - it can put great strain on family finances alongside the emotional distress. Buying protection insurance can provide a financial lifeline for themselves, their businesses and their families in the event of the unexpected happening.

Overcoming the objections – View your toolkit here

Sources:
9UK Labour Market: August 2015, Office for National Statistics.

10Protection matters: does women's financial planning match their priorities?, Aegon, 2016

11UK Labour Market: August 2015, Office for National Statistics - 14,530,000/100 x 43 = 6,247,900

Businesses will protect themselves against many things — but how many don’t consider insuring their single biggest asset – themselves or key employees? Have your clients considered what would happen if they became ill or their business lost a key employee unexpectedly?

In 2014, 20%12 of SMEs (around one million companies in the UK) were solely or partially led by women. As this trend grows, female business owners become responsible not only for themselves, and in some cases their families, but also their employees.

However our research paints a worrying picture, indicating business continuity and succession planning for many female business owners isn't high on their priority list:

  • 54% don't have any protection for themselves or their family13;
  • 60% don't have protection for their business13;
  • only 18% told us their family would receive the value of their share of the business through selling to co-owners (who would continue to run the business)13; and
  • 58% told us their business would stop trading if they were to die13.

Your clients’ have worked hard to get their businesses to where they are today – but these figures indicate a clear disconnect between priorities and safeguarding income.

While it’s good to see 13% of female business owners having contingency plans in place13, much more needs to be done to make sure businesses can continue to trade should an owner or key employee become ill or die. It’s also worth revisiting these plans to make sure they’re up to date and reflective of the business’s needs today. It’s important these plans are reviewed regularly to make sure they continue to meet the needs of both your client and their business. 

We’ve developed a number of tools and videos that you can use with your business clients to highlight the importance of having business continuity and succession plans in place and the need for making sure these are properly managed. 

Overcoming the objections – View your toolkit here

Sources
12Contribution of women-led and MEG-led businesses to the non-financial UK economy, Department for Business Innovation & Skills, September 2015

13Protection matters: does women's financial planning match their priorities?, Aegon, 2016

Research

Protection matters – does women’s financial planning match their priorities? (PDF)(Opens new window)

Videos

  • Suzanne’s story - Watch Suzanne’s story to see just how important protection cover was when she was diagnosed with breast cancer.
  • Charles and Libby - Dan and Charles run a printing company together. But when Dan dies unexpectedly, the business isn’t prepared for his death. This case study shows the impact Dan’s death has on the company and highlights the difficult decisions his business partner and family need to make.
  • Patrick’s story - Find out how Business Protection from Aegon helped Patrick, a three-times cancer survivor, protect his business, employees and family.

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