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Voice of the Employee
  • Two in five UK employees (39%) do not have any form of life insurance
  • 38% of these have not even given any thought to life protection
  • Four in five without protection don’t have a will – adding to uncertainty for families
  • Well over half of employees who do not have life insurance (59%) say being offering this benefit by their employer would make them feel more valued

A survey of UK employees for Canada Life Group Insurance revealed that two in five (39%) UK employees do not have any form of life protection. When extended across the entire working population in the UK, this could amount to as many as 12.1million people[1].

Those surveyed with two employed earners in the household reported an average combined take home pay of £3,154 a month.  However, the survey suggests this figure would typically fall to £1,703 (a decrease of 46%) if one of them died – or considerably more if it was the main “breadwinner”.

ONS figures on average household expenditure for essentials (including housing costs, fuel and power, transport, food and non-alcoholic drinks) set the cost at £1,396 a month for mortgage holders (£1,368 for renters)2. These outgoings may not be greatly reduced by the death of one earner, so the loss of one salary would have a huge financial effect on the family if no protection benefit is payable.

Meanwhile, ONS life tables suggest that 1 in 8 men and 1 in 12 women in the UK die during their working life (between the ages of 22-65) 3 , which further illustrates the importance of having appropriate cover in place.

 

Employees failing to plan ahead

38% of employees without life protection admitted that they had not given much thought to putting this cover in place – the most commonly cited reason for not taking out a life insurance policy.  Yet 34% said they didn’t know how immediate costs (such as funeral expenses) would be met if anything was to happen to them and 37% said they didn’t know how their survivors would meet long term financial demands, including housing costs.

All these points seem to highlight the extent to which people avoid dealing with this uncomfortable topic and prefer to bury their heads in the sand rather than confront what might happen if they were no longer around. This is particularly worrying as 38% said that, if their survivors were relying only on savings and help from family and friends, they would expect their standard of living to be affected within one year.

To further evidence a reluctance to plan ahead, four in five (80%) of those without protection also stated that they do not have a will, which leaves employees’ families even more vulnerable and their inheritance plans unclear.

 

Is there a role for employers to play?

Cost was the second most common reason given by employees (27%) for not considering life insurance.  Over half (59%) of all employees surveyed without cover in place said that being offered life assurance by their employer would make them feel more valued.  21% of them actually said they would feel “very valued”.

The provision of life insurance by employers, perhaps as part of their auto-enrolment pension plans, could prove to be a strong staff attraction tool – 51% of employees said it would improve their perception of their employer, highlighting the important role offering life assurance could play as part of an employee benefits offering.

Paul Avis, Marketing Director, Canada Life Group Insurance commented on the findings:

“As sub-50 employers are enrolled into automatic pensions, employers can no longer rely on just a salary and basic pension package to support their recruitment and retention efforts. Everyone will soon be offered a pension, so it’s important that employers consider how they can stand out from the crowd: simple and cost-effective employee benefits are an obvious solution.

“Many employees are currently burying their heads in the sand and choosing to ignore unpleasant issues, as demonstrated by the large numbers that do not have a will in place and have not considered how their death would affect their families financially. One of the most common reasons for not having life insurance is it is too expensive – but employers can offer this to their staff for less than 1% of salary. Our survey shows staff would feel more valued, and therefore probably more likely to stay within their current organisation, if their employer provided a group life assurance policy.

“Group life assurance offers invaluable support – for example, through a probate and bereavement helpline – as well as much needed financial security to employees’ families in the event of death. Auto-enrolment has presented the perfect opportunity for organisations to review their employee benefits offering and our new Simply Class Group Life Assurance product offers a straightforward and cost-effective tool for advisers to support their needs.”

Survey of 600 employees carried out in April 2015 (does not include those who are self-employed).

1 ONS Labour Market Statistics (May 2015) – there are 31.10m people in work. 39% = 12,129,000 people employed without life cover.

2 ONS family spending report 2014

3 ONS Life Tables 2014

 

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