A recent study by Beagle Street insurance has shed light on the substantial financial impact faced by families upon the premature death of a breadwinner.
The research, incorporating essential household spending and mortgage payments, estimates this impact to be as much as £190,000 over ten years.
The insurer emphasises the need for British families to be better prepared for such eventualities, especially given the low savings rates in the UK and the median take-home pay being less than £28,000.
The study points out that the actual financial burden could be even more significant when considering additional costs like childcare, maintaining living standards, and leisure activities, compounded by the rising cost of living, inflation, and high-interest rates. However, only 30-35% of UK adults currently have life insurance coverage.
The situation is critical even for families where both partners are equal earners; the loss of one income can make the cost of living unaffordable for the surviving partner. This often leads to downsizing or moving to rented accommodation.
The precariousness of the situation is heightened by the fact that many households have minimal savings, with 50% of 18-40 year-olds reporting less than £2,500 in savings.
To assist families in assessing their needs and determining adequate life insurance coverage, Beagle Street commissioned MindMetre, an independent research organization, to develop the ALFI (Adverse Life-event Financial Impact) model.
This model, based on a ‘defined family structure’ of two partners with equal salary and two children, provides a financial assessment for British regions covering a ten-year period until the children reach adulthood.
Beth Tait, Beagle Street’s associate marketing and distribution director, said: “Our ALFI model is just a starting point for the most basic financial impact of a premature death, which in reality may be much higher. It’s crucial to plan ahead to ensure families are protected financially should the worst happen.”
