New jobs and pay rises trigger protection review
As the traditional triggers for buying life insurance, income protection and critical illness cover now typically occur later in life, events such as starting a new job or receiving a pay rise are becoming more important in the eyes consumers, according to Royal London.
The insurer’s 2019 State of the Protection Nation report found that although buying a house and starting a family are recognised as the main triggers for taking out protection by consumers and advisers, there are different perceptions when it comes to the next biggest triggers.
Advisers think a friend or relative being ill or dying is the next biggest trigger, however few consumers take out protection for this reason. For consumers a salary increase is the next biggest trigger, with the report finding that this caused one in 10 (12 per cent) people to buy income protection.
‘Single earners’ are identified as one of the most financially vulnerable consumer groups with the greatest need for protection. This group is made up of 30 to 49-year-olds who live in low-cost housing and have limited savings and pension and retirement provisions.
While single earners are the most sceptical about protection, more than half (52 per cent) said they would last less than three months on their savings or investments if they couldn’t work due to illness or injury. Only 9 per cent of single earners agree that people in employment should consider income protection.
Royal London found consumers are most likely to buy life cover in the next five years rather than income protection or critical illness cover, with 18 to 34-year-olds being the most likely to purchase any type of protection.
People think they are more likely to die during their working lives than not be able to work as a result of a serious health condition or long-term sickness. However, an average 30-year-old woman is 12 times more likely to be off work ill for two months than die during her working lifetime.
Jennifer Gilchrist, protection specialist at Royal London, said: “Traditional triggers such as buying a house are happening at a much later stage for people, but younger consumers still need protection such as income protection.”