Legal & General calls for the industry to accept “the way we build families in the UK is changing”

According to the latest research commissioned by Legal & General (L&G), roughly 6.5mn adults in the UK are waiting until they’re married, become parents, or own a home before they begin financial planning.

Related topics:  Legal & General,  Protection
Tabitha Lambie | Editor, Protection Reporter
27th March 2024
Legal & General Families
"Waiting to reach traditional life milestones like marriage and parenthood before engaging with your finances poses risks. "
- Paula Llewellyn, Chief Marketing Officer & Managing Director (Direct) at L&G

After analysis, Legal & General (L&G) found that the average age of adults having their first child is the highest since records began, sitting at 32 years old. Likewise, women are getting married at 33 (men at 35) and the average person is buying their first home at 34 years old - which is the highest in decades.

And yet, key life milestones are typically when families start to take their finances more seriously. Two out of five (21%) adults who haven’t started a family yet said this was a factor in putting off key financial decisions. This includes taking out protection insurance (22%), starting to save into a pension (23%), and putting money into savings (18%).

With key life milestones delayed, financial engagement in the UK is also declining with 35.7mn adults classed as financially disengaged. Based on L&G’s most recent data, the lack of people taking out protection insurance could leave millions of families vulnerable with half of all Critical Illness (CI) claims taking place before the age of 50. Furthermore, millions of young people are on track to enter retirement with an annual shortfall of more than £25k by the 2060s.

One in four (23%) family households are now blended families where two adults with children from previous relationships come together and mix their families. This can sometimes complicate family finances as people are more likely to co-parent with people outside their home.

Meanwhile, three in five (60%) families who don’t have children, are never planning to have them. This means they’re less likely to take out products such as Life Insurance and CI, since having children often leads people to consider these products.

“Our research shows that people are waiting until they reach midlife to think about their money, with the average UK adult only engaging with their finances at age 48,” exclaimed Paula Llewellyn, Chief Marketing Officer & Managing Director (Direct) at L&G, “this is because life milestones tend to motivate people to act and think about their finances.”

Paula believes that “waiting to reach traditional life milestones like marriage and parenthood before engaging with your finances poses risks.” It increases the likelihood of missed opportunities for insurance, savings, and investments; “and the impacts are already being felt.”

“With families changing, Financial Services also needs to consider how we help people think about their finances sooner, without relying on milestones of the past […] there is always more to do to innovate and update how we communicate with people, meeting them where they are in their lives and with their finances,” she concluded.

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