Insurance giant Royal London has published a study that suggests that the reason for the lower number of people buying Protection Insurance is due to their perception and lack of awareness about the plethora of benefits that the cover offers. They conducted a study on 2,000 people and brought forth many facts that suggest that while 25% of UK adults have a life insurance policy, only a fraction of the people (6%) have critical illness cover. Moreover, income protection insurance is the least chosen cover with only 4% of the crowd going for it.
The main reason behind the low number of policyholders is the ‘price’ as many UK citizens feel that the insurance cover is quite expensive. 29% of participants said that they do not have life insurance cover, 32% kept themselves away from buying critical illness cover and 31% did not choose income protection policy as they found premiums heavy. The insurer investigated the premium costs to reveal that for a cover of £120,000, one needs to pay a premium of £21.28 per month while a critical illness cover worth £71,500 makes you liable to pay £30.58 per month as a premium.
Aside from price, it is the lack of awareness of the benefits of the cover which keeps people away from buying insurance products. Only 38% people had a view that insurance is important for their family and dependents in the event of their death while 47% agreed that life insurance is necessary if one has mortgages or dependent family members. The figures suggest that we need to bring in more awareness so that more people buy insurance products.
The third reason which keeps people away from buying the policy is the fear of claim rejection. In the study,it was discovered that 14% of the people fear claim rejection in case of life insurance, 19% of them had the same fear for critical illness cover and 18% thought there are more chances of claim rejection in income protection covers. This is sheer negligence as studies suggest that most of the insurance providers arrange for paying out 97.2% of all claims. Therefore, the general idea that the claims would be rejected should be removed from the people’s mind.
Debbie Kennedy from Royal London said “State of the Protection Nation reveals that just one in 10 people in the UK think income protection is necessary. Yet they also want to protect themselves and their loved ones should hard times hit. There is clearly more we can do to raise awareness of the positive impact insurance can have on improving the financial resilience of people.”
It was also found that most Britons realise the need for the cover, but very few of them actually buy it. Only people with children under the age group of 18 were more sincere about purchasing all three kinds of insurance policies. 21% of parents agreed for the need of all the three covers, especially the critical illness cover.
The study brought the fact to light that the government and insurance providers need to work harder to make people understand the need of insurance during their working life. While 22% thought they may die during their work hours, 9% thought of choosing an accident free job and 11% considered 3 months sick leave over insurance. Contrary to this, the reality suggests that 25% of those polled had an experience of losing a job at a certain point in their life while 15% had been on sick leave for a period of more than three months.
Debbie Kennedy spoke on the figures by saying that “Our research shows that people are far more likely to think they will die during their working life than be hit by redundancy or critical illness, yet statistically it is far less likely. Official statistics show that more than four times as many people were made redundant than died early 3 – showing the importance of having cover beyond life insurance.”
To conclude, the State of the Protection Nation research suggests that we need to ensure that people are aware about the benefits of the insurance covers to make them purchase these policies. At FreePriceCompare, we suggest the cheapest life insurance quotes after comparing all UK insurance providers to make sure that customers get the maximum benefits from the cheapest insurance policies.