18
ISSUES: Marriage
Chapter 1: Marriage
believe they can pass on their assets to
a surviving spouse without incurring
any Inheritance Tax.
Over a third (36%) of cohabitees who
intend to marry do not know that the
Marriage Allowance actually exists.
Automatic pension rights?
More than one in five (21%)
cohabitees believe they would inherit
their partner’s final salary pension
if they passed away. However, not
all schemes will pay benefits to
unmarried partners in the event of
death and it is important for long-term
cohabitees to review their pension
scheme rules. For schemes where
unmarried partners are permitted
to be beneficiaries, they need to be
named as such on the nomination
form; however, a third (33%) of
cohabitees have not yet named the
beneficiaries of their pension if they
die and 6% don’t know whether they
have.
Financial vulnerabilities
Cohabitees’ misunderstandings and
sense of being disadvantaged are
further compounded by the fact they
tend to be in poorer overall financial
health than married couples to begin
with, and are less likely to have
financial protection in place – putting
them on a less-secure financial
footing.
Aviva’s
data
illustrates
that
cohabitees’ monthly incomes are 14%
lower compared to married people
(£1,944 vs £2,265). This is partly due to
age as 84% of 18–24s are cohabitees,
compared to over half (54%) of 25–
35s. That said, over a third (37%) of
36–45s and almost two fifths (39%) of
46–55s are cohabitees, highlighting
that since cohabitating is a lifelong
choice for some, financial weakness is
not reserved to one generation.
Home-ownership levels are also
significantly lower among cohabitees:
58% own their home outright or
with a mortgage, compared to three
quarters (74%) of married people –
cohabitees are therefore less likely
to have experienced a key trigger for
taking out financial protection.
Three quarters of cohabitees (74%) do
not have a will versus 61% of married
couples, while almost two thirds
(64%) of cohabitees do not have life
insurance compared with less than
half (45%) of those who are married.
Only a minority of cohabitees (4%)
have a precautionary arrangement,
such as a cohabitation agreement,
in place to protect their finances
should a relationship break down.
Typically the modest cost of such an
agreement is around £300 – the same
as organising a will.
Perceptions of affordability are a
significant barrier for cohabitees
when it comes to financial protection,
and they are more likely than married
people to have not even thought
about taking out any financial cover
for their loved ones or families.
Despite sharing a home, almost a third
(31%) keep their money completely
separate from their partner, nearly
twice the proportion of married
people that do the same (17%). One
in ten (10%) cohabitees also admit to
only being with their partner because
they cannot afford to separate:
equivalent to 330,000 couples across
the UK.
Paul Brencher, Managing Director,
Individual Protection, Aviva UK
commented:
“Many couples in the UK are choosing
to marry later or not at all. But
cohabitees do not enjoy the same
financial benefits as those who are
married or in a civil partnership.
“What is particularly concerning is
the extent to which some cohabitees
falsely believe they are entitled to
the same benefits as those who
are married. Such confusion has
the potential to cause significant
financial stress should their family
experience an unexpected change in
circumstance.
“Though it is welcome that more
rights are on the horizon through the
Cohabitation Rights Bill, cohabiting
couples should take the time now
to better understand their financial
situation in order to plan effectively
for the future. We must strive to create
a mind-set among all UK family types
that proactively planning for the long
term is important not just for those
who are married but for all those
who want to enjoy a comfortable
future without the fear of financial
uncertainty.”
15 February 2017
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The
above
information
is
reprinted with kind permission
from Aviva. Please visit www.
aviva.com for further information.
© Aviva 2017
