14 million households have at least one dependant, but 57% do not have enough life cover to protect them, data from Hargreaves Lansdown’s Savings & Resilience Barometer has revealed.
According to the data, the average life insurance gap for households with dependants was £89,800.
For homeowners with children this was £194,200, and for renters with no children it was £3,400.
In addition, 2.4 million could afford to close their life insurance gap and still have enough money left at the end of the month.
The average cost of closing the life insurance gap is £134 a year.
For homeowners with at least one child, closing this gap would cost an average of £321, while for renters without children, closing the gap would cost just £5.
Sarah Coles (pictured), head of personal finance at Hargreaves Lansdown, said: “When someone utterly relies on you financially, you can’t afford not to deliver.
“It’s why it’s so alarming that well over half of households with at least one dependent don’t have enough life cover to protect them.
“However, the latest edition of the HL Savings & Resilience Barometer shows that more than two million households could close their protection gap at a stroke.
“The gap is bigger for homeowners, who need insurance to cover the cost of paying off the mortgage, so those they leave behind don’t have to worry about this massive monthly bill.
“It’s also bigger for parents, who don’t always have the cover they need to manage the cost of caring for their children until they reach adulthood.
“For those facing a combination of the two, the cost comes to £321 a year. For renters without children, closing the gap is much cheaper – at just £5.”
She added: “However, because renters tend to be on much lower average incomes, it’s still a stretch.
“The good news is that for 2.4 million households, closing the protection gap doesn’t have to involve somehow finding this cash from thin air.
“They’re not behind on debt repayments or bills, and have enough cash left over at the end of the month to buy this insurance and still have the wiggle room they need to be resilient.
“The bad news is that this group is dominated by higher earners – with 78% in the top two fifths of all earners.
“By contrast there are none in the bottom two fifths of earners who can close the gap and still save.
“It means they need to make some much more difficult sacrifices in order to protect their family.”
Cole concluded: “If there is anyone relying on you, it’s essential to consider exactly what help they would need if something was to happen to you, and ensure you have the emergency savings and insurance in place to cover it.
“If it’s too onerous a financial burden to pay for it all, you need to prioritise, but it’s essential not to overlook life insurance in the overall picture.
“If the worst came to the worst, your family would be lost without you in so many ways, but insurance ensures that their finances would survive.”
