Almost half of unmarried couples could miss on a life insurance payout because their partner has failed to name them as the beneficiary, according to new research.
Scottish Widows found there was widespread confusion about this basic element of financial planning, particularly among unmarried couples.
Only half of unmarried adults who are in relationships (52 per cent) know whether their partner has a life insurance policy, and more than a quarter of those who do know (27 per cent) are unaware of the policy’s value.
Meanwhile, 48 per cent of these adults didn’t know whether their partner had a life insurance policy, with 43 per cent saying their partner had not made plans to ensure they are legally entitled to any insurance pay-out.
The survey found that more than a third of couples (34 per cent), rarely discuss long-term financial planning, saying they did not think it was important. This figure increases to 40 per cent among over-55s.
Scottish Widows points out that an unmarried partner may not automatically be entitled to a life insurance pay-out, so failing to discuss finances could jeopardise financial security in the long term.
However its research showed that same-sex couples are more likely to discuss their finances – showing a greater level of communication. Nearly a quarter of married same-sex couples (24 per cent) discuss long-term financial matters on a monthly basis. However, married opposite-sex couples only do so every two or three months.
The result of this is that people in both married and unmarried same-sex couples are likely to know more about their partner’s finances. Among married same-sex couples, 60 per cent know how exactly how much their partner earns, compared to only 53 per cent of people married to someone of the opposite sex.
However, for all, levels of awareness are lower among couples who are not married. The proportion of people who know exactly how much their partner earns drops to 47 per cent for same-sex couples and 45 per cent for opposite-sex couples among couples who are not married.
This trend of unmarried couples knowing less about each other’s financial plans reinforces the importance of impartial, specialist advice that can facilitate these crucial conversations and help couples discuss their protection. Otherwise, many people risk losing out on the entitlement to their partner’s life insurance pay-out that many of them would expect in the event of their partner’s death.
Scottish Widows protection director Rose St Louis says: “Our research has shown that unmarried couples find it difficult to talk about planning for the worst and proactively avoid it as they don’t feel it is important. However, despite being difficult to discuss, there is an urgent need for transparency to ensure long-term security.
“As marriage rates continue the decline, financial advisors have a crucial role to play by supporting couples sensitively through this process and ensuring they understand the different protection offered to them. Helping to facilitate these conversations so they can handle the issue sensibly and sensitively is an integral part of professional advisors’ role in today’s society.”
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