What’s the news in protection? On the surface you could be forgiven for thinking there isn’t anything new, that protection is still generally being overlooked and undervalued.
Figures from Royal London’s State of the Protection Nation Report show that just 35 per cent of people have life insurance, 12 per cent have critical illness cover and 9 per cent have income protection.*
And while more people with a mortgage have taken out protection, the numbers are still worryingly low – 40 per cent have no life cover, 71 per cent have no critical illness cover and 81 per cent have no income protection.*
And yet many consumers recognise that it would be beneficial to have some cover in place.*
There are a lot of people who don’t have protection who probably should – especially if they’re already talking to a financial adviser.
But converting those thoughts into action is still proving difficult. So it’s hardly surprising that 72 per cent of advisers agree that the protection gap is increasing.**
When it comes to selling protection to clients, advisers can typically run into some obstacles along the way. Clients may think it’s not necessary, it’s too expensive, it’s too depressing, or that it’s easier to go for an off-the-shelf solution.
At Royal London, we’ve got tools and support to help advisers overcome objections and have better protection conversations – helping clients to understand both the value of protection and the value of tailored advice.
Beyond these statistics and conversations that are already happening, there’s some proof of a shift in consumer trends, which could provide advisers with some new opportunities.
Take the much talked about gig economy – the popularity of short-term contracts or freelance work, as opposed to permanent jobs.
The UK is now home to an estimated five million self-employed people – 15 per cent of all UK employees.***
And we’re not just talking about Uber drivers and Deliveroo couriers. In fact just under 30 per cent of gig workers are professionals working in the accountancy or legal industries.****
The more people are inclined to work on a self-employed basis, without employer benefits like occupational sick pay, the more they need protection.
The good news is that the possibilities within this growing market are being recognised by advisers – 28 per cent agreed that the gig economy provides them with a new opportunity.**
Millennials are another topical group – often talked about as a breed of consumer that’s very different to the types of clients advisers are used to dealing with. Of course every generation has its own trends and behaviours. We’re a product of our environments after all. But are the youth of today altogether different?
74 per cent of financial advisers believe that young consumers are addressing their protection needs too late, and 43 per cent say they are struggling to attract clients under 35.** Unfortunately, younger people don’t recognise that they could get cheaper cover if they had the protection conversation earlier.
Yet almost three quarters of 18-34 year olds who bought cover through an adviser say they have an ongoing relationship with them. That’s compared to around 45 per cent of 35-54 year olds and those aged 55 or over.*
Clearly there’s a huge number of younger clients who are looking for guidance, which goes against the theory that they’re happy to do everything themselves online. And if advisers could get them through the door, they could have a loyal client for life.
And life expectancy is going up, partly due to better health care, which means we’re able to survive diseases that previously killed us. But that also means we’re now living longer with critical or chronic illnesses, which naturally puts a strain on our survival.
This isn’t something many people think about. But unless they’ve built up substantial savings, how would they expect to replace their income after a cancer diagnosis, heart attack or stroke?
It’s clear we need to work harder to make people realise not only the benefits of protection, but the long-term outcome for their family and themselves if they become seriously ill.
So while the old objections remain, these aren’t insurmountable. And if we look closer at the way society is changing, we can see there are more opportunities for the protection conversation than there used to be – this time it’s a question of looking more closely at client demographics to find the opportunity.
At Royal London, we’ve got the tools and support you need to stay in front. Visit our website to find out more: adviser.royallondon.com/overcominghurdles
* State of the Protection Nation, Royal London, May 2018
**Royal London adviser polling, November 2018
***Trends in self-employment in the UK, www.ons.gov.uk, February 2018
****Truth about the gig economy: our younger generation will demand a flexible future, www.fenews.co.uk, August 2018