Two in five UK respondents said their savings would only support them for three months or less if they couldn’t work due to a serious injury or illness.
And less than a quarter felt their savings would provide financial support for more than one year. This is despite the fact that as many as 42 per cent have experienced income loss in their working lives due to serious illness.
Interestingly, the study also showed that only 19 per cent of respondents claim to have a good knowledge of income protection products, suggesting that more needs to be done to raise awareness of the product’s benefits.
This lack of understanding also seems to extend to price with many overestimating how much cover costs. More than a quarter of respondents said they would be willing to spend 5 per cent of their income on it though such cover can be bought for significantly less.
The findings and take up in general across all products indicate that people still have an ‘It won’t happen to me’ attitude despite many having suffered the consequences at first hand.
Grudge buy
Unlike car insurance, life insurance is seen by many as a grudge buy. It’s not mandatory and with households stretched, people can turn a blind eye to it.
Even when we know that statistically by 2020, almost one in two people (47 per cent) will get cancer at some point in their lives, according to data from Macmillan Cancer Support's Cancer mortality trends: 1992–2020.
Changes to the way financial advice is accessed has also had an impact. Where people used to take out a mortgage through an adviser who may have been tied to a bank or building society, some advice around protection needs would have gone hand in hand.
However, with with fewer advisers than 20 years ago, some customers may find it harder to access valuable and affordable advice on protecting what is theirs.
Green shoots
The current economic environment however has the potential to stimulate new interest and opportunities – plus wider shifts in how we live.
Figures from the Bank of England published in March show that mortgage approvals hit an 11 month year high in January.
And with a healthy mortgage market, comes opportunities for advisers to offer support to customers to protect and cover their liabilities should the worst happen.
Generation Rent
As well as demand for simple solutions, we need to recognise our customer’s changing needs.
Home ownership in England is at its lowest level for 30 years with nearly half of young adults now renting privately, according to the latest English Housing Survey.
Overall, one in five households lives in private rented accommodation and this trend is set to grow. Regardless of whether you own or rent your property, if you become ill and unable to work, you need to pay for it.
