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Third of families with children still struggling to pay off debts accumulated since UK lockdowns began

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While most UK households have felt the financial impact of the pandemic, some have suffered more than others.

Almost a third of families with children at home (32%) are struggling to pay down debt which has accrued since the first UK lockdown began in March 2020, compared to just 16% of households without children, according to the latest Household Financial Confidence Tracker from comparethemarket.com.

Excluding mortgage repayments, UK households say that their debt sits at nearly £9,500. Families with children have more debt to burden, with this group reporting they have an average debt total of almost £12,000. By contrast, families without children say their debt equates, on average to nearly £8,000 Across all groups, households report that their highest debt is on personal loans, at an average of £2,688 per household, followed by credit cards (£1,900) and debit cards (£881).

Of those struggling to pay off outstanding debt, the majority are suffering in silence – 60% have not sought financial support, either through universal credit, debt charities or charities like Citizens Advice. Many could be unaware that there are solutions and advice available to them that may help reduce their debt. comparethemarket.com is urging those who are struggling to seek financial guidance and to also check whether they could save hundreds of pounds by switching household bill providers.

In order to manage debt levels more than a quarter (29%) of UK households have started a budget, 27% sold unwanted or unused items such as furniture, toys or clothes, and 26% decided to put off any large purchases. Confirming how some households have struggled to save for a rainy day, nearly a quarter (24%) have tried to pay down debt instead of putting any money into savings. Consolidating debts can be an effective way to reduce debt but only 8% have used this method.

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However, there is hope that this financial uncertainty will be short lived as a third (33%) of families with children anticipate their finances will be in a better position by the end of the year than they are today.

Ursula Gibbs, Director at comparethemarket.com, said: “Families have faced extraordinary financial challenges throughout the pandemic. Even though the UK is now open again after Freedom Day, worries around debt that may have stacked up during lockdowns, in some cases to help make ends meet, means this may still be a stressful time for some. No one should suffer in silence and there is help available. Money management services and debt charities, like Citizen’s Advice and the Money Advice Service, can offer free confidential advice and support to help people tackle their debt.”

“It is also worth seeing if you can cut down monthly outgoings by switching household bills. Of those surveyed, almost a quarter changed provider to get a cheaper deal and help reduce their debt. While it may seem like a small step, it only takes minutes and could save hundreds of pounds each year.”

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Money

Cheapest car insurance falls to six month low despite return of traffic

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woman in yellow shirt driving a silver car

The cheapest average premiums quoted have tumbled over the summer to just £533 – a £60 drop year-on-year.

This is the lowest quarterly average for cheapest premiums available since summer 2015.

The fall in the cheapest average premiums has driven up savings available to motorists. Drivers can save an average of £98 on their car insurance by switching to the cheapest deal when their policy expires. 

The average annual car insurance premium declined by £71 year-on-year across the summer months (June – August), according to the latest Premium Drivers research from comparethemarket.com.

The average premium now stands at £631, compared with an average of £702 for the same three-month period in 2020. 

In each lockdown since March 2020, the cost of car insurance had fallen due to fewer cars being on the road and a subsequent drop in claims. Insurers had used savings from fewer claims to offer lower premiums to customers. However, the average motor insurance premium has also declined in recent months, from £644 in June 21 to £617 in August 21.

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The fall in premiums over the past three months is surprising, as more Covid-19 travel curbs were relaxed and road traffic increased in this time. In fact, road traffic has reverted to pre-pandemic levels with car use returning to 98% of its February 2020 level, on average in August 2021, according to figures from the Department of Transport1. This more recent fall in premiums suggests insurers may be competing more aggressively to attract new customers.  

Young motorists can benefit from the greatest savings by switching car insurance. The average premium for drivers aged under 25 has decreased to £1,085, falling from £1,134 in the same three months (June – August) in 2020.

If young drivers shop around for the cheapest deal on average when their policies come up for renewal, they could typically save £201 on their car insurance. 

Lead image: Andrea Piacquadio / Pexels.com)

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People buying health insurance in the UK are getting younger according to new data

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The average age of a policy holder is down by 20% in the past year

The average age of those investing in private medical insurance (PMI) via comparison site GoCompare has gone down from 40 to 33 in the past year.

It means those buying policies between January and September 2021 were 20% younger than those who purchased private healthcare in the same timeframe in 2020.

Richard Jones, of GoCompare health insurance, said: “Perceptions around private medical insurance were already changing, but there has certainly been a noticeable shift in the way people are actively investing in healthcare since Covid-19 arrived in the UK.

“It has been well documented that waiting times for public health services have been significantly affected by the pandemic, as well as an increase in A&E admissions as a result of people having to wait longer for treatment.”

“Conversely, on the ground we are seeing a new generation of consumer coming to the market who are more inclined to include private health insurance in their monthly outgoings,” Richard added.

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Waiting times for planned hospital procedures through public services now reportedly range from 30 weeks to over a year in some areas as NHS medics continue working to clear the back log created by Covid 19.

Patients are meanwhile reporting the use of loans, savings and, in some cases, crowd funding campaigns to have procedures carried out here in the UK or overseas in lieu of having private medical insurance in place.

Taking out a private medical insurance policy can help cover the cost of private treatment for pre-agreed conditions through the payment of a monthly or annual premium, and can support a quicker diagnosis and other routine treatments.

Richard said: “Healthcare insurance has always been available for consumers in the UK to access a range of healthcare and treatment options outside of those provided by the NHS, and many families will already have been making full use of their policies throughout the pandemic.

“But for others less familiar with how private healthcare works, what it actually covers and how premiums are calculated, investing in a private medical insurance policy could feel like a bit of a minefield, not least in the current climate.

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“It’s important to remember, for example, that for chronic conditions and pre-existing conditions, or in emergency situations, there will always be a need to access public health services even if you are considering taking out a private policy,” Richard added.

“It’s our responsibility as those working within the industry to help these consumers navigate their way around the kind of cover options available, what each policy offers and help them to understand what is and isn’t covered by health insurance generally, therefore, as greater numbers look towards private health insurance to support them and their loved ones at the present time.”

Private medical insurance can be provided for on an individual, family, joint or international basis, and is also offered by some employers as an added benefit too.

Conditions covered within a policy will vary depending on the kind of cover provided for, but might typically include in-patient treatments like routine health checks, tests, overnight hospital stays, out-patient treatment and more.

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Money

Two thirds of adults admit to letting their home insurance renew automatically

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More than two thirds (67%) of householders in the UK admit to letting their home insurance renew automatically, according to GoCompare.

Over a quarter (29%) leave their home insurance policy to renew without even checking for other quotes, and when asked why, 17% admitted that they don’t want the hassle of finding other renewal prices even if it means saving money.

The main reason people allow their existing policy to renew is through loyalty to their current provider, however, with 22% of those who automatically renew claiming their insurer has always looked after them and 18% assuming value for money on the basis the previous year’s quote was the cheapest.

Almost a third (29%) of those who did shop around for other deals did so because they found their renewal price had gone up, however, and 7% found their current provider no longer met their requirements.

Ryan Fulthorpe, of GoCompare home insurance, said of the findings: “Our home insurance is just one of many contracts and policies that the average householder today will have in place at any one time.

“It’s not difficult to see how allowing an existing policy to simply roll over and begin a new 12-monthly term is the preferred option for many trying to balance out the different demands on their time in the modern world.

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“It can also be easy for people to assume their home insurance requirements are unlikely to have changed much within the space of a year, particularly if there has been little to no change regarding the place in which they live, or the people they live with, within that time,” Ryan continued.

“The remit provided for by home insurance is often much wider than many people realise, however, and even if your overall domestic set up hasn’t changed it’s highly likely specific items within your possession that are eligible for cover will have within the space of a year, for example.”

“There is a lot of work which has already been, and continues to be done, within the industry to make the process of switching from one provider to another as straight forward as possible, and also around the transparency of home insurer’s terms and conditions in making that change,” Ryan added.

“But this research shows us there is still more to be done in supporting the consumer when it comes to researching, maintaining and updating household policies which they rely on to protect them from disruption emotionally and financially too.

“For most people, our home is our most prized possession in life and the idea that any serious harm could come to it, or any of the contents contained within it, simply doesn’t bear thinking about,” Ryan said.

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“This makes the insurance policy we put in place to protect these things an emotive purchase, much more so than other types of insurance, so it’s not just about getting the right price for homeowners, it’s also about ensuring a policy adequately meets our individual needs.”

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