Parents are far more likely to have inadequate life insurance than couples with no children, according to Hargreaves Lansdown’s Savings and Resilience Barometer for July 2023.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “62% of couples without children have enough cover, compared to only 26% of couples with kids and 8% of single parents.
“This is likely to be because the need for life insurance rises dramatically after we have children – and either parents don’t realise they have a shortfall, or they’re worried about the cost,” she added.
But just how a parent can withstand the cost of children depends on how much they earn.
The report by Hargreaves Lansdown and Oxford Economics broke it down by income and also looked at the middle fifth of earners.
Parents on average incomes are significantly less likely to have enough cash left over at the end of the month (20% compared to 37%) and are roughly half as likely to have enough in savings (36% compared to 73%).
Beyond life insurance
But the extra expense of children extends way beyond life insurance.
“Couples with kids spend an average of £5,356 more every year than couples without – which over 18 years comes to an eye-watering £96,416,” Coles continued.
“And as a result, their financial resilience suffers across the board,” she said.
Single parents face the most challenges
“For single parents, life is even tougher, and they face far lower resilience on almost every measure.
“Even when you just boil it down to the absolute essentials, couples with kids spend almost a fifth more than those without (£2,266 a month vs £1,923), while single parents spend more than a quarter more than singles without (£1,428 vs £1,150).
“It’s no wonder that, at the end of the month, a couple with kids has an average of £227 left after paying the bills, while a couple without children has £382, a single person living alone has £34 and a single parent just £25,” she said.