The squeezed middle are risking falling into the protection gap.
Data from the Hargreaves Lansdown savings and resilience barometer shows that although people in their 30s and 40s tend to need the biggest and most robust safety nets, an alarming number of them fall short.
On average, 44 per cent of people have enough life cover to protect their family, but this falls to just 26 per cent of couples with dependent children.
The middle years are when we are likely to have the most people depending on us. Many people have relatively young families at this stage, relying on them to keep the wolf from the door. Some will also have older relatives who need support of one kind or another.
They are also more likely to own a home with a sizeable mortgage, which needs to be paid if something was to happen to them. It means a protection gap can do an awful lot of damage.
Short-term resilience
The HL barometer builds a picture of short-term resilience. It looks at emergency savings, but also at the insurance cover and workplace protections people have in place.
It considers their total assets and life insurance, and then subtracts their debts and the cost of looking after their children to the age of 18, to assess whether they have enough life cover.
It also looks at how long any sick pay or income protection would last if they were ill, and whether they have redundancy cover or critical illness insurance.
Couples with children actually have strong scores for everything but life cover.Only around 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, with fewer than half of people buying enough cover.
Those gaps are particularly wide where the need is greatest, so that only a quarter of those with children have enough life cover, and only around a third of those with mortgages have enough.
To make matters worse, because the likelihood of having enough cover rises with income, higher earners are doing a fair amount of the heavy lifting.
Only 39 per cent of middle earners have enough cover, which falls to 28 per cent among the second quintile (the second fifth of lowest earners), and rises to 53 per cent among the highest earners.
Insurance cover
The squeezed middle actually fares better when it comes to critical illness cover, with around two in five of those from their mid-30s to their mid-40s buying some form of cover.
Couples with children actually 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.
But while all of these are real positives, and can make a major difference at key moments in life, it is essential it does not come at the cost of life cover.
There are some groups who fall particularly short when it comes to protection. Those who are already in ill health are particularly vulnerable, and just 30 per cent have the right amount of life cover, compared to 41 per cent of those in good health.
This group fares badly across the board when it comes to insurance cover, partly because some of them are unable to work, so do not get the cover that comes with employment.
Only 18 per cent have enough redundancy cover (compared to 63 per cent of those in good health), 39 per cent have sufficient sick pay or income protection (87 per cent of those in good health) and 9 per cent have critical illness cover (33 per cent of those in good health).
Where people have chosen to work for themselves in order to build a working life around their family, they may be particularly exposed, because self-employed people have significant gaps in cover.
We need to consider exactly what help our family would need if something was to happen to us.Only 12 per cent have enough redundancy cover, and 43 per cent have enough sick pay and income protection, which for employees will usually be covered by their employer.
However, they score higher than employed people for life cover (46 per cent) and critical illness cover (38 per cent).
On the plus side, when we add in whether people have enough emergency savings to be resilient, the squeezed middle fare much better.
While there are clearly insurance shortfalls, enough of them have at least three months’ worth of essential expenses in savings that half of people have either ‘good or ‘great’ short-term financial resilience from their late 30s to their late 50s.
And while couples with children fare worse than the child-free, 58 per cent still score 'good' or 'great'.
The groups that still struggle when savings are added into the overall insurance picture are the self-employed, and most dramatically those in ill health – almost two thirds of whom score ‘bad’ or ‘poor’ when it comes to short-term financial resilience.
It is a salient reminder that we need to look at our resilience in the round, and not neglect any corner of our finances.
We need to consider exactly what help our family would need if something was to happen to us, and ensure we have the savings and insurance in place to cover it.
If it is too onerous a financial burden to pay for it all, we need to prioritise, but it is absolutely 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.
Sarah Coles is head of personal finance at Hargreaves Lansdown
