Research Reveals Worrying Attitudes toward Financial Protection

Royal London has recently published its second State of the Protection Nation report, which looks at public attitudes towards financial protection products and levels of take up across Britain.

Many Don’t See the Need for Protection

Despite only a small percentage of respondents saying they had life insurance (3%), critical illness cover (3%) and income protection (5%) through their employer, the majority of people felt they didn’t need income protection (58%), critical illness cover (47%) and life insurance (34%).

Around 46% of survey respondents felt they were unlikely to go on sick leave for three months or more, 44% thought they were unlikely to have an accident that meant they were unable to work and 34% felt it was unlikely they would contract a serious health condition or illness.

However, previous research has suggested 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. Yet the reality is only two in five could survive financially for more than six months if they were unable to work.

The main reason given for not taking out protection was that premiums are too expensive (mentioned by 69% of respondents). Respondents also believe they won’t get ill and they don’t need insurance.

Protection Should be Seen as a Necessity

“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,” commented Toby Bainbridge, Head of Protection Solutions at Royal London. “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,” he added. “The need to protect their lifestyle is just as important as it is for homeowners.”

People Insure Their Phones Before Their Health

Scottish Widows also recently raised concerns about the level of financial protection in place across the country, after its research found that only 9% of households have a critical illness policy in place, despite 21% admitting that their household wouldn’t survive financially if they lost their income due to long-term illness. In fact, people appear to be more likely to insure their mobile phones (12%) than to protect their own health.

Life insurance is also seen as less of a priority today, with just 27% having a life policy in place, which is a fall of 7% compared to the previous year.

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