People in their 30s and 40s make up a “squeezed middle” that fall into a protection gap, research from Hargreaves Lansdown has shown.
The research found that, while people with a mortgage need more protection cover, those aged this age are more likely to not have adequate cover.
Hargreaves Lansdown head of personal finance, Sarah Coles, said: “Often people will consider that insurance needs to cover their mortgage, but they may not think about any children, and covering the cost of bringing them up."
However, she suggested this shortfall may owe less to people forgetting to get insurance to pay off their mortgage if they pass away than to the fact that this may be all that they’ve covered, so they “haven’t considered support for their children”.
Hargreaves Lansdown also found that those in their 20s and 30s are the most likely group to fall short on life cover.
Meanwhile, just 30 per cent of those aged 30-34 and 35 per cent of those aged 35-39 have adequate life cover.
However, Coles pointed out that those in their 30s and 40s carry a “huge weight of responsibility”, being more likely to have a young family relying on them and having a mortgage.
“Only a third of people in their 30s have enough life cover, and while that rises to 43 per cent of those in their early 40s, and 47 per cent of those in their late 40s, it still leaves sizeable gaps.
“The shortfalls are even more worrying among couples with children as only 26 per cent of whom have enough life cover.”
Hargreaves Lansdown head of active savings, Mark Hicks, said: “People going through the expensive years of mid-life may struggle with protection, but they do well when it comes to emergency savings.
“Between their mid-30s and mid-50s, around two thirds of people have at least three months’ worth of essential expenses in savings. It actually peaks in our mide-50s at 69 per cent.
“Because there are so many people relying on us at this stage in life, it means we need to put more away to cover emergencies, which is why on average we save more than 5 per cent of our income between the ages of 30 and 54.”
However, Coles added that this squeezed middle fares better when it comes to critical illness cover, with almost two in five of those from their mid-30s to their mid-40s buying some form of cover.
“Couples with children have strong scores for everything but life cover, with an impressive 52 per cent holding critical illness insurance, and scoring above average for redundancy cover, sick pay, and income protection”, she said.
“But while all of these are real positives, and can make a major difference at key moments in life, it’s essential it doesn’t come at the cost of life cover.”
tom.dunstan@ft.com
