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Tony Levene: Old friends, same old story?

The shifting generational attitudes to protection

In common with many readers of Health Insurance & Protection – I assume the majority – I attend quite a few industry conferences and other get-togethers. They are great ways to make new acquaintances and renew older ones, catch up on gossip and generally see the world from a protection viewpoint. And there is always that old game – compare the lunch on offer!

But sometimes, I look around the room and wonder if we are not all in a bubble. Useful and enjoyable as they are, it’s hard sometimes to escape the thought we are just talking to ourselves. The world is somewhere else and during the event, we are safe knowing it’s unlikely anyone will challenge our view of the universe.

The message – that PMI and other forms of protection are essentially good and essential goods – is shared by all present. Opinions that might disturb this may be outside but not inside our safety zone.

What sparked off these thoughts was a recent lunch I attended – nothing to do with the industry but with eight friends I have known a very long time. Some work, some took early retirement but all were educated to degrees and beyond at elite institutions. Two still lecture on mathematics (but not actuarial stuff!).

We all decided the B word – that political thing that dominates the news – was truly banned. Besides the boredom factor, it would have been unfair sport as eight of us had voted one way leaving one to defend the reverse direction. So I introduced the P word. That’s protection in all its forms.

I wanted to find out what they knew about it, whether they have or had ever had this cover, and what they thought of it.

I cannot pretend the results were in any way scientific or statistically meaningful. They were all white, male, of roughly the same age and from similar backgrounds. But they were also united in one other way – none of them was hard up in any way. Whether working or retired, they were all comfortably off, homeowners with, as far as I could gather, enough assets to whet a financial adviser’s appetite.

I have often argued – here and elsewhere – that protection cover has a massive discomfort to overcome. Those who need protection most are the group who can least afford it. For “can least”, read “can’t”. Try to explain to someone on universal credit – or worse, someone whose payments have been stopped for some benefits infraction – that it only costs £5 a week to buy a policy. That fiver can be the difference between the children eating or going without.

None of those at my lunch had this worry. They could all afford relevant protection plans, both now and in the past. Yet, outside of any employer benefit they might have had, – and most had no idea whether they had been part of a company plan or not – their attitude was at best begrudging.

Here’s a few sample comments.

“Yes, I suppose I had some health cover when I worked in Saudi Arabia. But there was no point in continuing when I returned. I have since had NHS treatment for prostrate cancer and for my hearing loss. I am obviously not happy to have the need but I am pleased with the treatment.”

“I am generally healthy. But while my local GP [in a remote town in the north of England] requires appointments booked some days ahead, my nearest NHS hospital is fine – there’s no point going private because the nearest facility is almost fifty miles away. I could see no reason to spend money on life cover because I don’t have dependants.”

“I was ripped off with an endowment mortgage. The only other time I bought a life policy for myself was when I left my wife to move in with a far younger woman. She was so worried that I would not make it she made me buy a policy. That romance failed to last much more than a year so I cancelled the insurance. I saw it as a waste of money then – and now.”

Now these were all survivors. Besides not dying, only the person with prostrate cancer (not fully covered under many critical illness plans) and deafness had suffered from any serious illness or disability.

They were part of that lucky generation with benevolent employers – only one still had a PMI plan because he works for an SME. However, he said: “Yes, I have this plan at work. And I am lucky enough never to have needed it. My colleagues, all younger, have made it clear that I am not expected to claim on it because that would mean all our premiums shooting much higher. I am not essential to the firm – no one is.”

Would they recommend their children bought protection? Here my co-lunchees were more equivocal. The majority said they would never suggest it but if it came up in conversation, they would neither push them into buying nor dissuade them from a policy purchase. Most of those who had children realised they were better off than their offspring.

But one thought, now that the subject had been brought up, he would tell his two sons to buy cover to the extent they could not cover the risk with their own or their family’s resources. “I suppose insurance makes some sense in some situations. The trouble is I don’t trust insurance companies. There is a difference – one is the concept and the second is the way it turns into reality.”

At that stage, our next course arrived. The conversation turned to something quite else.

What to make of it all? Either there’s a whole generation with negative views who are passing these on to their children or there’s a group who had never had to deal with life’s knocks. Alternatively, it could be many were so well protected at work – job for life, final salary pension, built in life cover – that they never had to worry about anything.

Just as changes in society mean we’ll never likely reproduce this security blanket again, they also mean we shall not see a return to the days of industrial life cover. The millions who had these plans are now precariously employed so regular payments for some future event which will probably not happen may be the last thought on their minds.