According to research industry body The Syndicate, most consumers believe that if they were off work for more than six months, their savings would be more useful to them than Income Protection. But saving habits in the UK have actually seen a general decline since 1997, which begs the question: Do people actually have the necessary savings to financially support them during long term absence? Paul Casey, Head of Marketing and Communications at Hanover Re, is concerned that we are currently seeing a “pseudo-insurance mentality” in the UK.
Misconceptions regarding the insurance industry, especially around Income Protection, are difficult to shake off. The Syndicate report showed that 27% of consumers assumed Critical Illness was the most useful protection one could buy, whilst 34% thought that the state would be the most useful support system if they were unable to work. But state support is fairly small and under some circumstances unavailable, meaning an immediate supplementation from savings would be necessary for most consumers.
But the most concerning result of the survey was that 24% believed that Income Protection would not deliver what it promised. 23% also said that they would recommend a Life Protection policy, compared to only 8% for Income Protection. The results are clear, the reasons for them however are more opaque. Despite many providers releasing statistics showing regular policy pay-outs to over 90% of its claimants, the rare instances of non-payment are disproportionally represented in the press, only adding to some of the incorrect assumptions surrounding insurance, especially Income Protection.
Advisers are working harder than ever to provide you with the right information on Protection. In a largely under insured nation with a poor return on current savings due to interest rates, it is now even more important to ensure you are covered and don’t have to look elsewhere to cover your finances in the event of long term absence.