Issue 18June 2018
News Roundup
Insurance too expensive?
The Royal London has revealed their second State of the Protection Nation report, revealing that the top reason people gave for not taking out protection was that they think premiums are too expensive (69%). They also believe they won't get ill and they don't need insurance. Despite this the want to protect their lifestyle and loved ones from the financial impact of becoming seriously ill or dying.
Nearly half of the people surveyed (46%) felt they were unlikely to go sick for three months or more, 44% thought they were unlikely to have an accident that meant they were unable to work and a third (34%) felt it was unlikely they would contract a serious health condition or illness.
Research from Pacific Life Re1 shows that the chance of being off work for two months or more before age 65 is 26% for males and 37% for females.
Even if illness struck nearly half (43%) felt they could manage for a year if they were unable to work due to serious illness or injury, 55% said they would manage for six months and 71% would manage for three months. The reality is only 2 in 5 would survive financially for more than six months if they were unable to work.
Despite only a small fraction (3%) of consumers saying they had life insurance, critical illness cover (3%) and income protection (5%) through their employer, the majority of people felt they didn't need any type of protection.
Their figures show that 58% of people with a mortgage have life cover in place if the home owner dies, leaving 42% unprotected. But worryingly 71% of people with a mortgage would have no protection in place if they were diagnosed with a critical illness, and 81% of mortgage owners have no income protection in place. The reason this is concerning is that people are far more likely to be diagnosed with a critical illness or have an injury that stops them working than to die before retirement age so more people should consider critical illness or income protection.
A quarter (25%) of people who don't own any type of insurance, said they were confident that this lack of cover was in line with their needs. This figure doesn't get much better when we look at those in full time employment with just over a quarter (27%) saying they were confident.
Toby Bainbridge, Head of Protection Solutions at Royal London said: "State of the Protection Nation 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. This will be a challenge to overcome as time and again people say insurance is expensive and won't payout which clouds their view of the market. We need a concerted effort by the industry to address these misconceptions."
"Buying a home and starting a family are still the two main triggers for buying protection, but this leaves working renters vulnerable to losing the roof over their head if illness or an accident struck and they were unable to work. The need to protect their lifestyle is just as important as it is for homeowners."
