With the cost of living rising, the struggle of getting on the property ladder and Brexit, the future of the UK is looking uncertain and the Millennials are going to be the most affected with what is around the corner. Therefore, new research from Canada Life reveals, Millennials are most likely to want to protect their income due to the uncertain circumstances, therefore, leading to a wider protection market within a younger demographic.
28% of employees aged 18-34 feel income protection is the most useful form of protection to support their career.
Income Protection policies are currently increasing, after Income Protection was considered as the overlooked protection, as it was not as well-known as Life Insurance or Critical Illness Cover and its properties were not as self-explanatory, it is now interesting to see that maybe the increase in sales are due to Millennials. Canada Life’s research shows that many Millennials have had their entire working life affected by the financial crisis of 2007-2008 and therefore, they have learnt the hardest lessons about financial security and stability and therefore are looking for more opportunities to protect themselves.
Across all age groups 17% of employees believed Group Income Protection through their employer would be the most useful benefit whilst 13% believed it to be Group Critical Illness. Whereas only 7.7% of the working population have Group Income Protection and only 1.8% have Group Critical Illness Cover.
As proven above, employees feel the need for these types of insurance, however employers have not enforced this kind of benefit as they did for Death in Service or Group Life Insurance benefits. However, if this is the case then why are people still not putting personal Income Protection or Critical Illness Policies in place?
A report produced by the EY revealed that trust in the Life Insurance industry is currently at an all time low with 55% of insured consumers and 68% of uninsured consumers having the perception that providers look for loopholes to avoid paying claims, despite the fact that 95% of all claims are paid by the industry. Cost and affordability were other issues for many with 42% stating they either do not think they need protection insurance or see it as a waste of money. 40% of uninsured people do not think they can afford cover and 25% say that more day-to-day outgoings are important.
To combat this the industry is currently exploring ideas around protection that travels with customers throughout life, this insurance can then be increased or decreased as needed. The EY research shows that the majority of consumers like the idea of this, particularly as they are in control and can make changes due to personal circumstances, such as moving to a new house, income changes or switching employment status.
34% of Millennials stated they would like monthly recommendations on insurance products and changes they can make to give them stronger or more efficient insurance policies. However, this was not agreed with the larger sum of the consumers asked, therefore proving the point that Millennials are starting to become more conscious of their financial stability and the products within the protection market that can help with this.
EY also states that, another opportunity to create more awareness and trust with the insurance providers is to have a single interface allowing insurance grouping at the same time as a life event (e.g house move, move job, baby, wedding) this would give consumers control of their numerous insurance policies and provide them with additional simplicity. Allowing Millennials to continue to improve and adjust their insurance products throughout their life.
The figures above prove that Millennials are looking to use insurance products to protect their income and families, however, as I mention in a number of my blogs, these insurance products needs to be correct to make sure you are protected, therefore seek professional advice before putting any insurance product in place.
*All fact and figures are from the article Meet the Millennials in the Personal Finance Professional Magazines by the Personal Finance Society– Autumn 2019 edition