Income Protection  

‘Astonishing lack of interest’ in insurance advice

‘Astonishing lack of interest’ in insurance advice

There is an “astonishing” lack of interest in insurance advice despite increasing demand for financial advice in general, according to Quilter.

A survey of 1,000 adults carried out in April found consumer demand for financial advice had risen during the pandemic.

Almost four in 10 (37 per cent) of those who had never taken advice said they would consider talking to a financial adviser after the pandemic and lockdown.

However, just 4 per cent of those were interested in insurance advice, which dropped to 3 per cent for those with children and grandchildren.

Charlotte Nixon, proposition director at Quilter Financial Planning, said: “This lack of interest is likely down to people simply not fully understanding how [protection] products work or how beneficial they can be”.

Ms Nixon added: “When I speak to people outside of our industry, they just don’t really understand what products are available, the different features, what one will pay out for what”.

Commenting on the research, Kathryn Knowles, managing director at Cura, said the fact that 37 per cent of respondents would consider talking to a financial adviser for the first time was “in itself… the first hurdle, getting to the point where someone is willing to actively engage with advice”.

Ms Nixon said she believed the coronavirus job retention and self-employment income support schemes had had an influence on the low interest in insurance advice.

Furloughed workers receive 80 per cent of their salary - up to £2,500 a month - under the job retention scheme, which the government extended until the end of October. It has also extended the self-employment support scheme by offering a second, three-month grant worth 70 per cent of average monthly profits.

Ms Knowles agreed the government’s support schemes could have influenced people to not look at insurance. “When a huge surge of people at the beginning of the pandemic tried to apply for income protection, some new policies quickly started to include a coronavirus exclusion. 

“Whilst this was an understandable business move from the insurers, it will have had the knock-on effect that some people will have wondered: ‘what is the point of paying for an income protection policy, when the state is going to pay me?’”

According to Ms Nixon, advisers in the Quilter network had been encouraged to engage with their clients, who were potentially receiving government support, to think about their financial situation in the near future and potential protection options when the support schemes come to an end.

Ms Nixon said that “clients [would] really... need some support from advisers around what they can do for them and the options that are available for them” when the schemes end.

Ms Knowles added that while the government’s support schemes are currently giving some financial security, they do not provide long-term income protection that can be “incredibly valuable”.

Additionally, Ms Nixon said she believed a perception among consumers that a protection provider will avoid paying a claim had an influence on the low interest in insurance advice, despite statistics that say otherwise.