Cost Is The Main Barrier For Consumers Buying Protection

In Individual, Industry News, Insurance, Protection by Stephen Ellis

When it comes to protection insurance, the number one reason why people in the UK do not take out cover is that they believe it will cost them too much. That’s one of the key findings from Royal London’s latest State of the Protection Nation report.

But can you really put a price on your health and financial security?

According to the Royal London report, 69% of people think protection premiums are too expensive. There’s also a belief among many that they won’t fall ill and, therefore, simply don’t need insurance.

Indeed, almost half (46%) of people said they felt they were unlikely to go on sick leave for three months or more, while 44% said they were unlikely to have an accident which would result in them being unable to work and a third (34%) said they thought it was unlikely they would develop a serious health condition or illness.

However, statistics show there is a 26% chance of men being off work for two months or more before the age of 65 and a 37% chance for women.

But how long can people survive financially?

If they were to fall ill and be unable to work, 43% of people felt they could manage financially for a year, while 55% said they could manage for six months and 71% could manage for three months.

Disappointingly, Royal London found that only a tiny fraction of individuals get protection through their jobs, with just 3% of consumers having life insurance, 3% having critical illness cover and 5% having income protection as benefits.

Despite this, many people said they felt they didn’t need income protection (58%), critical illness cover (47%) and life insurance (34%).

One reason given for the seeming reluctance to take out protection is inertia (a tendency to carry on unchanged). This is highlighted by the fact 20% of people who are working full-time recognise they need income protection but don’t have a policy. Furthermore, over a third (38%) of people working full-time feel they don’t need income protection, while just 8% indicated they didn’t need it because they had suitable cover via their employer.

Worrying statistics for homeowners

Royal London found that 58% of people with a mortgage have life cover in place if the homeowner dies. But that means 42% are left unprotected. However, 71% of people with a mortgage would be unprotected if they were diagnosed with a critical illness, and 81% of mortgage owners have no income protection in place.

The insured raised concerns, saying people are far more likely to be diagnosed with a critical illness or have an injury that prevents them from working than to die before retirement age.

Toby Bainbridge, head of protection solutions at Royal London, said: “The research reveals that the industry has work to do, to change people’s mindset, so they see protection as a necessity instead of something they don’t need”.

Sadly, it’s only when illness strikes or an accident happens that people realise how valuable the financial protection from an income protection or critical illness plan can be.

Stephen joined Premier Choice in 2006 as a Group Risk consultant and became Head of Group Risk in June 2013. In December 2017, Stephen also took over responsibility for the Protection division within Premier Choice and works to grow this in the same way he has the Group Risk division. Protection is a specialist area and fits well with his experience and expertise in the group risk market.