Parents urged to maintain cover as cash-strapped offspring fail to flee the nest
Advisers are being urged to ensure their clients’ protection needs are up-to-date, following research which suggests many parents do not expect their grown-up kids to become financially independent until they are 38 years old on average.
The study, published today, shows that some 4.4 million adults are receiving financial support from their parents, with 1.6 million so-called ‘chadults' still living at home.
The rise of the so-called ‘chadult’ means that many parents are spending £47,000 on average on children over the age of 21. LV=, the life office which ordered the analysis, said the figures show parents are financially responsbile for their children for longer than in the past and as a result need to ensure their finances are protected against the impact of ill health or death.
Parenthood has traditionally been a key driver of protection sales as new parents decide to ensure their family's finances are looked after, although the recession is having an impact even here.
Research published earlier this year by Aviva suggests that four out of five new parents are risking their children's financial futures by “skimping” on life cover.
The survey of 1,500 recent parents carried out for Aviva suggests that while two out of five (40%) start a savings account for a new arrival, fewer than one in five (18%) take out life insurance.
Mark Jones, LV= head of protection, said that while bringing a child up remains costly until adulthood, that burden is now stretching still further.
He said: "Bringing up a child is expensive and for millions the cost doesn't stop there. Young people are leaving university with large debts, youth unemployment is at a record high and property is unaffordable for many. So it is likely we will see a growing number of adults who continue to depend on their parents financially.”
Jones said that although many parents are going without luxuries as a result, going without adequate protection insurance could have far more serious consequences both for them and their grown-up children.
According to the research published today, British parents are regularly helping to pay towards their grown-up children's basic living costs including bills and rent, at an average of £2,103 per year or £175 per month for each ‘chadult’. On top of this, parents are spending an additional £9,476 on average per child on ‘big ticket’ items over the course of their adult lifetimes, such as helping to get them on the housing ladder, further education, holidays, or paying towards a wedding.
The research carried out for LV= shows that the average age of a first-time buyer in the UK today is 38, and this is predicted to rise to 41 by the year 2025. As a result, it is perhaps not surprising that a third (33%) of parents with ‘chadults’ cite their children not being able to get onto the property ladder and not wanting to rent, as the reason for their still living at home.
Separate research published this week by Scottish Widows suggests that families are increasingly vulnerable financially, with two in five saying they 'just get by'.