The need for financial protection products

Earlier this month, Denise Brewster won her legal battle to be entitled to her long-term partner’s pension after he died in 2009. Ms Brewster and her partner Lenny McMullan were not married but had lived together for 10 years, owned their own home and had got engaged just two days before Mr McMullan passed away suddenly.

This High Court win is due to influence pension rights of unmarried, financially dependent couples. And with more and more couples living together who are not married or in a civil partnership, who have dependents, a mortgage and other responsibilities, modern living is causing a shift in the set-up of financial protection benefits.

The need for financial protection products to catch up with modern living is vital. Especially in circumstances where unmarried couples are renting.

Research by Scottish Widows showed just under a third (30%) of private renters admit they wouldn’t be financially secure if their lost their main household income. But only 16% (about a fifth) have life cover in place, and only 3% have critical illness insurance.

When obtaining a mortgage, people are often sold financial protection products, but this is not the case in the rental market, despite a significant financial commitment being made. An unmarried couple who are renting are therefore not served well by the market and are not encouraged to consider products that can protect their finances should one of them die suddenly, become injured or critically ill.

We think the workplace has a role to play in communicating and distributing the financial protection products of the future. But of course the products offered still need to appeal to a broad range of employee needs.

Employers’ role
First, employers should recognise how valuable and important their role is, and if they haven’t already, they should consider implementing a workplace benefits programme which offers financial protection for employees should they become seriously injured, ill or die.

Second, they should think about how they can design this programme to offer maximum flexibility for all employees, whether married, mortgaged or not. A flexible benefits programme can do this by allowing employees to flex and adjust their cover to meet their own needs.

Last but not least, they should make sure that the products they offer as part of their programme provide the widest range of cover.

At Ellipse, we recently updated our critical illness product to allow employees to insure their cohabitant partner under their spouse cover. Along with other benefits such as child cover, including step children and those that are adopted, these updates allow the product to encompass the whole family, rather than being just an employee benefit.

In a nutshell
Modern living is constantly evolving and adapting from tradition norms. With less couples choosing to marry, and many of those renting, there’s likely to be a whole segment of people missing out on protection benefits that will provide them financial security should they die, become injured or ill.

The workplace is the perfect place to capture this demographic and employers can use a flexible benefits structure to offer more choice to employees.

Check out our revamped critical illness product on our website.