56% of UK adults have no life insurance in place, according to a new study from Scottish Widows – and Britons are more likely to insure their pets and mobile phones than their incomes, despite economic uncertainty.
The findings, from the insurer’s Consumer Protection Report, show that although people are aware of products such as life insurance, critical illness cover and income protection insurance, this often does not translate into taking them out. 54% of UK adults say they review their finances once or twice a year, yet take-up of protection products remains very low.
‘This is worrying, as protection insurance products can provide a vital safety net for individuals and families during difficult times,’ says Which? expert Martyn Saville. ‘Failing to insure your life, for instance, could have serious consequences if your loved ones rely on your income and you suddenly passed away. You might leave your family in serious financial hardship and under massive stress at an already traumatic time.
‘More worrying is the high number of people who have no income protection cover. It’s vital to think about your family’s ongoing protection needs if you’re unable to work, not just if you die.’
Life insurance and protection gap
According to Scottish Widows, 97% of people understand the potential importance of life insurance, but only 44% have life cover in place.
Meanwhile, 86% of people surveyed were aware of critical illness cover and 83% knew about income protection insurance – but the proportions of people who took out policies were just 12% and 7% respectively.
Scottish Widows’ research also shows that 23% of the UK population believe they can’t afford life insurance, while 26% see cost as the primary barrier preventing them from buying critical illness cover.
However, Clive Allison, market director of protection at Scottish Widows, says: ‘Many people don’t really know how much it would cost them to take out these products and don’t realise how quickly they’d fall into financial hardship if they were unable to work due to illness.
‘Costs are perceived as high but customers don’t really know what the cost would be for them – in reality the cost can be equivalent to a monthly Sky TV package, or a couple of Starbucks coffees a week.’
Finding the right protection insurance
Martyn Saville comments: ‘Protection insurance products can seem complex, and considering how you’d cope if the worst happened – redundancy, serious illness or even death – isn’t pleasant for anybody.
‘But it is important to think about how you and your family would get through difficult times, should they arise. The Which? guide to Understanding protection insurance will help you get to grips with what kind of policy might suit you, so you can prioritise which form of cover is most important.
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