Life insurance is essential but are protection products providing an adequate solution?

4 May 2017
Royal London commissioned Opinium to run our State of the Protection Nation research to find out how people felt about their own protection needs and the industry as a whole.

We surveyed people who had already taken out some kind of protection insurance and those who didn’t have any. We also asked advisers how they felt about their own protection needs, and the challenges they face selling it.

Here’s an extract from the full State of the Protection Nation report.

Does everyone need protection?

Almost half (47%) of all consumers in the survey say life insurance is essential for anyone with a mortgage or dependants. The research revealed differences across the age ranges with 58% of those aged 55+ believing that life insurance is essential if you have a mortgage or dependants, but just 37% of 18-34 year olds feel the same. This might simply reflect that the older age groups have experienced some financial shocks in their lifetime either through ill health or loss of income, or perhaps they are more aware of their own mortality.

What’s consistent across these age groups is recognising a need for protection cover doesn’t necessarily translate into an action to buy.

A quarter of UK adults we surveyed have a life insurance policy (26%), however just 6% have critical illness cover and 4% have income protection. Perhaps unsurprisingly, those with children under 18 are more likely to have all types of cover than those without as shown below:

• Income protection (with children 8% vs 2% without)

• Critical illness (with children 11% vs 4% without)

• Life insurance (with children 35% vs 22% without)

Despite these objections from consumers, one fifth of advisers (21%) had seen an increase in the amount of life insurance they had sold in the last 12 months compared to the previous year.

Are the products available suitable for customers’ needs?

Despite the perception that life insurance is essential at certain life stages, consumer confidence in the ability of protection products to provide a solution to individual needs is low. This is particularly apparent in the 55+ age group where over half (53%) disagree with the statement ‘protection insurance products provide a real and genuine solution to my needs’.

Despite this lack of confidence, those in the 55+ age group were the most likely to have life cover (30%). Perhaps the uncertainty of those aged over 55 lies more with other covers as they were also the least likely to own any critical illness cover (3%) or income protection (1%).

As life insurance is usually the most straight-forward of protection covers, perhaps a lack of understanding of the benefits of other covers could be the barrier that prevents further purchases.

For the other age groups, confidence in the ability of protection products to provide a solution to individual needs is slightly higher, but far from ideal. Almost one in three (29%) 35-54 year olds don’t believe that protection insurance offers a solution to their needs compared to almost one in six (18%) 18-34 year olds. This suggests that younger generations are more open to the idea that protection could provide a solution to some of their financial needs, but that we have some work to do to engage with this group.

By comparison, just 3% of advisers feel that protection products are failing to provide a real and genuine solution to customers’ needs. This is a huge discrepancy which perhaps reinforces something we already know - that more consumer education around the benefits of protection cover is needed.

You can download our State of the Protection Nation report to read more about the survey results.

Source: State of the Protection Nation March 2017, Royal London.  2,000 nationally representative adults (18+) surveyed.

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About the author

Sarah Scott

Sarah has worked within communications and marketing in financial services since 2003. She enjoys writing and is interested in the influence of social media in marketing.

Last updated: 25 Mar 2018

This website is intended for financial advisers only and shouldn't be relied upon by any other person. If you are not an adviser please visit royallondon.com.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.