The latest Family Finance Report from Aviva reveals that while family incomes and savings pots are generally rising across the UK, a widening gap is appearing between the ‘haves’ and ‘have nots’.
According to the report, typical family incomes over the last six months have reached their highest point since March 2012. Furthermore, better attitudes and saving habits mean that typical families are saving a record £113 each month.
But while this paints a positive picture of the state of UK family savings, it also masks the fact that the income gap between different family types is widening, with many families (26%) not saving anything at all each month. This is a reality that leaves them extremely vulnerable to significant changes in financial circumstances; especially as debts have increased.
11.7 Million Households ‘Financially Vulnerable’
Aviva’s research found that while 35% of families have suitable life insurance, just 11% have critical illness cover and even fewer (8%) have income protection cover, which would safeguard their lifestyles should they become ill or unable to work due to an injury. This means that 11.7 million UK households are financially vulnerable to loss of earnings.
Over the last six months, the proportion of families taking home at least £2,500 a month has risen by 4% from 39% to 43%. However, those taking home £1,000 or less has remained at 10%. Therefore, one in 10 families are living on less than half of the ‘typical’ families income.
The average UK family now spends £505 a month on housing (rent or mortgage repayments) and without sufficient income protection in place, many are not only risking their financial security, but also potentially jeopardising their family home.
The outlook for parents raising children alone is increasingly concerning as they have seen their incomes drop from £1,176 to £1,077 over the same period. Adding up to £1,188 annually, this monthly loss of £99 equates to one month’s salary over the course of a year.
Families Urged to Check their ‘Financial Foundations’
Louise Colley, managing director, protection at Aviva, said: “Not having appropriate insurance leaves families at risk of falling into debt – or worse, losing their homes – should the main breadwinner become unable to work. We’d urge every family to check their financial foundations to assure themselves they are secure and protected against all eventualities.”
She added: “It’s important to highlight and address the fragile footing of some British families so they are not left exposed if their circumstances should change.”
Income protection for you and your family is so important and can be relatively inexpensive. The sooner you are able to take cover out the cheaper the premiums will be. Premier Choice can help you find the appropriate cover to suit your budget.
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