If you were lucky enough to win the lottery, would you prefer to be given a regular monthly amount for the rest of your life or a one-off lump sum? Apparently, your answer will largely depend on which generation you belong to, according to new research.
Ahead of the launch of the National Lottery’s new Set For Life game, Just Group conducted a survey to better understand what appeals more to players: a lump sum payment or the reassurance provided by a fixed amount given to them over a longer time period.
The new Set For Life game, the National Lottery says, is designed to appeal to a “different kind of player” who prefers the “stability of regular monthly payments”. It gives players the opportunity to pocket £10,000 a month for 30 years.
£1m Lump Sum or £1k Per Week?
For the Just Group survey, respondents were asked if they would prefer to receive £1 million as a lump sum, £1,000 a week for the rest of their lives or a mix of the two.
The results showed that 53% of baby boomers would choose the lump sum amount, 42% would choose a mix of the two and just 5% would opt for the £1,000 a week for life.
However, millennial survey respondents did not follow suit. They (millennials) were four times more likely (at 19%) to choose the £1,000 a week for the rest of their lives than the baby boomers. They were also a third less likely (at 37%) to choose the lump sum payment. The balance (44%) said they would go for a mix of the two options.
When it comes to how the respondents would spend their money, 40% said they would use it to help family and friends. A similar proportion (39%) said they would either buy a luxury item, such as a car, or spend the money on home renovations. The same percentage again (39%) said they would use the money to go travelling.
Group communications director for Just Group, Stephen Lowe, said: “Our research suggests a real challenge for savers and their advisers to balance the desire for a cash lump sum with their need for regular income to cover the essentials in retirement.”
But what does this have to do with insurance? Well, for a start, it shows that young people, in particular, value the reassurance and stability provided by regular payments. Knowing that they have the means to cover all of their financial obligations each month is something that greatly appeals to them.
Therefore, it’s quite surprising when you learn that younger consumers do not secure protection until it’s too late – especially as the Just Group research shows that more millennials would prefer a regular monthly payment for life than a lump sum jackpot.
“Whatever age we are, we all seem to see value in knowing we have the income to pay the bills. And even if the worse comes, perhaps Camelot are missing a trick by making these games either/or rather than allowing a combination of the two,” Lowe added.
If the thought of protecting your finances and safeguarding your family in the event you cannot work because of an illness or injury is one that appeals to you, we’d love to help you understand what options are available to you. Contact us today.
Claire Ginnelly is the Managing Director of Premier Choice Health and has been in the private medical insurance industry since 1991. All her experience has been gained working for large insurance companies managing the distribution of health insurance products through intermediaries. She has held senior positions within Standard Life Healthcare, as Head of Intermediary Sales, and Groupama Healthcare, as Head of Distribution.