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Protection is sold never bought

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Guide to protection awareness

Protection is sold never bought

How big is the problem of a lack of awareness of protection in Britain, and how might this affect your ability to help more people get appropriate insurance?

The lack of take-up is a big problem. Reinsurer Swiss Re has estimated the so-called protection gap in the UK to be at more than £2.5trn in size.

Data from the Association of British Insurers has revealed that, in 2015, 25 per cent of all breadwinners had no life insurance policy in place. This equates to nearly 8.5m people in the UK.

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But the gap is not just in terms of life insurance, but also in terms of income protection. A YouGov poll of 2009 UK adults, commissioned by Royal London in February this year, found nearly 5m renters in the UK had no plans in place to cover their rent if they could not work for three or more months.

Despite the cuts to housing benefits, 60 per cent said they could only survive on their savings for three months or less, while 53 per cent said their first port of call would be to apply for state benefits.

Kesh Thukaram, director of Best Insurance, thinks there is nowhere near enough awareness of protection in Britain.

Just looking at the workforce, he says: “There are approximately 27m people employed in the UK and yet the number of people holding short and long-term income protection cover is less than 2.5m – not even 10 per cent of the working population.

“Only one person out of 10 has made any provision to prevent debt escalation if their salary is lost due to an accident, sickness or unemployment, clearly indicating the need for protection campaigns.”

Mr Thukaram adds: “Research appears on a regular basis, warning the average UK household savings are so low most families have less than two weeks of cash to bail them out should their income be interrupted.

“Yet if, on average, a person were to set aside a £1 day, it would pay the premium for cover to fund them for £1,000 a month, over 12 months. Essentially, a £350+ outlay delivers a £12,000 return.”

Paul Avis, marketing director for Canada Life Group Insurance, points out this lack of awareness is affecting not just individuals but the UK.

He says: “This is actually a big potential problem. Figures show there are approximately 250,000 former employees trying to claim employment support each year, and between 330,000 and 350,000, including self-employed, trying to claim state benefits.

“This is a significant portion of the working population trying to claim at a time when state benefits are being reduced. For example, employment support is being cut from £5,300 to £3,800 from April 2017.

“The importance of getting protection is not getting through to employers or employees.”

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