ProtectionJun 23 2015

Call for more employers to offer life assurance

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Call for more employers to offer life assurance

A new survey has suggested that pick-up of life assurance would greatly improved if it was offered by their employer as part of a benefits package, as data reveals that two in five UK employees do not have any form of life insurance.

A survey carried out by Canada Life Group Insurance found that 51 per cent of all employees surveyed without cover in place said that being offered life assurance by their employer would make them feel more valued, with 21 per cent of them saying they would feel “very valued”.

Paul Avis, marketing director at Canada Life Group Insurance, suggested that employers can offer life insurance to their staff for less than 1 per cent of salary if they provided a group policy.

Mr Avis said: “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.”

Out of the 600 surveyed, with two employed earners in the household, they reported an average combined take home pay of £3,154 a month.

The survey however suggested this figure would typically fall to £1,703 - a decrease of 46 per cent - if one of them died, or considerably more if it was the main earner.

Office for National Statistics figures showed on average household expenditure for essentials - including housing costs, fuel, power, transport, food and non-alcoholic drinks - is £1,396 a month for mortgage holders and £1,368 for renters.

However, Canada Life said that while the death of one earner may not greatly reduce these outgoings, the loss of one salary would have a huge financial effect on the family if no protection benefit was payable.

Thirty eight per cent 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.

However 34 per cent said that they did not know how immediate costs - such as funeral expenses - would be met if anything was to happen to them and 37 per cent said they did not know how their survivors would meet long-term financial demands, including housing costs.

Alongside this, 38 per cent 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.

Mr Avis said: “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.”

ruth.gillbe@ft.com