As we near the end of an unbelievably challenging year, many of us will be hoping for some degree of normality this year.
However, with Covid-19 restrictions still in place, an uncertain winter lies ahead, and many people are understandably worried about the impact of the pandemic on their financial situation.
The crisis has taken its toll on the nation, with millions of UK borrowers taking advantage of financial support since the start of the pandemic.
Over 2.6 million mortgage payment deferrals have been approved to date and with the government’s furlough scheme representing the largest income protection (IP) scheme the country has ever seen: the fragility of people’s finances is clear to see.
Revealing the cracks
If the crisis has taught us anything, it is that the nation is unprepared for sudden financial shocks. Many people don’t have a safety net to fall back in case they experience a drop or complete lack of income.
In fact, research from The Exeter last year showed that nearly a fifth (17 per cent) of self-employed workers in the UK have no personal savings to rely on in times of financial crisis.
However, despite this picture of financial pressure and continued uncertainty, many working adults are still not turning to the insurance sector to protect their incomes.
Given the financial hardship facing so many, there is a clear and concerning disconnect when it comes to engaging consumers with the protection industry and the cover they so badly need.
Initiating the conversation about the need for cover and communicating the benefits of IP can be difficult when many people adopt the ‘it will never happen to me’ attitude.
However, as an industry we also need to consider how we are talking about our products and how we can simplify the language we use to raise awareness of the features and benefits of insuring your income.
Speaking the same language
This crisis should make IP a more attractive proposition for many working families. New research from The Exeter reveals that 70 per cent of working adults say the Covid-19 crisis has made income security a bigger financial priority.
However, consumers are still largely unaware about what IP really means, and what a huge impact it can have in providing financial security should they be unable to work due to illness or injury.
In fact, nearly half of the UK’s working population (46 per cent) said they were aware of IP but didn’t know what it covers or how it works.
To address this and to drive real, sustainable change, we need to make the language used in the industry more straightforward and easier to understand in order to break down barriers and allow for more relatable and constructive customer conversations.