- £469 million a year is spent preparing for first-born babies in the UK.
- Six in ten new parents say in hindsight they bought unnecessary items for their first baby.
- But just 27% of first-time parents take out life insurance to protect themselves and their new arrival.
Vital financial protection is being overlooked by UK couples embarking on parenthood for the first time according to new research by insurer Aviva, which reveals that an average of £1,645 is spent preparing for the arrival of a first baby, equivalent to more than £469 million a year across the UK1.
The study of 2,000 UK parents with children under the age of five shows that average spending on first babies has increased more than 18% on the £1,389 average spend in 2012 when the study was first conducted.
Consistent with its previous research, Aviva found that items such as prams, car seats and cots are still seen as essential purchases.
Nearly six in ten expectant parents are still buying some baby goods they say in hindsight were unnecessary.
The most common items that parents said they didn’t use or could have done without were breast pumps (15%), baby slings (14%) cot mobiles (13%) and pamper treats for the mum-to-be (13%). The average spend per household on these items alone is £134.59.
Whilst parents-to-be are rightly focused on the joyful preparations for their new arrival, the study shows that unfortunately, preparations do not always extend to important long-term financial planning.
About six in ten parents-to-be have started a savings account for their baby.
Little more than one in five have a life insurance policy to ensure financial resilience against the loss of a parent.
A monthly premium of £15 for a standard life insurance policy for both parents for 18 years, would provide a £237,123 tax-free sum if one of the parents died or was diagnosed with a terminal illness within that period.2
Even fewer parents with under-fives in the survey had made a will, at just 16%. These two indicators of important financial planning are in stark contrast to the risk-prevention that parents do undertake to safeguard the physical wellbeing of their new baby. Unsurprisingly two-thirds (66%) installed stair-gates, a similar proportion (63%) moved medicines out of reach, while half (49%) fitted catches on kitchen doors and cupboards.
Paul Brencher, Aviva UK Health and Protection Director said: “Considering that buying your first house and starting a family are traditionally the most common life events that prompt the arrangement of life insurance, it is very concerning to see that nearly three-quarters of first-time parents are not protecting their families’ future financial wellbeing. Additionally, a large proportion of UK adults have little or no savings3 that they could rely on to help weather the financial fall-out of an unexpected loss of income due to ill-health from a working parent.
“Ensuring that there is appropriate financial protection in place should be on every new parent’s list of essential items when they are starting a family. Even a modest monthly premium to cover both parents could provide the invaluable peace of mind that their family will have some financial provision should one of the parents fall ill, or worse was to happen.
“It is so important for new families to consider their financial ‘what if?’ plans. To help encourage families to consider this and to get them started, Aviva offers a year of free life cover of £15,000 per parent, per child, for every one of their children under the age of 4.”
Aviva’s survey also shows that two in five (40%) of new parents bought a new car, with an average spend of £9,414, while one in five (20%) moved to a new house spending an average £45,291 to move up the property ladder.
New parents with children under the age of 4 can register online for Aviva’s offer of free life cover for a year of £15,000 per parent, per child, by visiting www.aviva.co.uk/freeparent.(4)
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1) Aviva research, conducted by Censuswide, among 2,000 parents with children under five in October 2019. The average ‘first baby spending’ breakdown is revealed as follows:
The figure of £469 million is derived by calculating the number of babies born to UK first-time mums in 2017 and multiplying by the average amount spent per baby as detailed above. The latest ONS data shows that 679,106 babies were born in the UK in 2017 and 42% were to first-time mums. Using this data, this equates to 285,225 babies born to UK first-time mums.
2) Aviva Standard Life Cover on a level term plan for a husband and wife aged 28 (the average age of first-time mothers in the UK), non-smokers, with monthly premiums of £15 over an 18-year period, information correct on 14 January 2020. Amount of cover purchased: £237,123 if either parent were to die or be diagnosed with a terminal illness within the term of the plan. Aviva life insurance includes terminal illness benefit. This means we pay the policyholder a guaranteed lump sum if he or she is diagnosed with a terminal illness and is not expected to live more than 12 months.
3) The Financial Conduct Authority’s report The financial lives of consumers across the UK in 2017 found that nearly six in ten (57%) of UK adults have no cash savings or savings of less than £5,000.
4) Terms and conditions apply.
Notes to editors:
- Aviva is a leading international savings, retirement and insurance business.
- Our aim is to earn our customers’ trust as the best place to save for the future, navigate retirement and insure what matters most to them. Last year, we paid c.£33 billion in claims and benefits on behalf of our 33 million customers.
- We operate through five business divisions: Investments, Savings & Retirement; UK Life; General Insurance; Europe Life; and Asia Life; and focus on three strategic priorities: deliver great customer outcomes, excel at the fundamentals and invest in sustainable growth.
- Total group assets under management at Aviva group are £501 billion (as at 30 June 2019) and our Solvency ratio is 195% (3Q19). Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index.
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