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New job and pay rise now important protection ‘triggers’

Cost of living is seen as a major threat to the protection market

Starting a new job or getting a pay rise are becoming more important triggers for buying protection, research suggests.

This is because traditional triggers, such as buying a house and starting a family, are happening later in life, according to Royal London.

The provider’s 2019 State of the Protection Nation report reveals advisers think a friend or relative being ill or dying is the next biggest trigger after buying a house, but the survey shows few consumers take out protection for this reason.

For consumers a salary increase is the next biggest trigger, with the report finding that this caused one in 10 (12%) people to buy income protection.

Single earners – 30-49 year olds who live in low-cost housing and have limited savings and pension and retirement provisions – are the most sceptical about protection. However, more than half (52%) said they would last less than three months on their savings or investments if they couldn’t work due to illness or injury. 

Only 9% of single earners agreed that people in employment should consider income protection.

Consumers are most likely to buy life cover in the next five years rather than income protection and critical illness cover, with 18-34 year olds being the most likely to purchase any type of protection.

People think they are more likely to die during their working lives than not be able to work as a result of a serious health condition or long-term sickness. However, an average 30 year-old woman is 12 times more likely to be off work ill for two months than die during her working lifetime, figures show.

The research also found more than half (55%) of advisers believe the cost of living is the most significant perceived threat to the protection market, followed by consumer inertia (50%) and lack of income growth (49%).

Consumer scepticism is also a major challenge faced by the industry, with a third (33%) of consumers saying they are sceptical about buying a protection product.

Jennifer Gilchrist (pictured), protection specialist at Royal London, said there is an opportunity for advisers to have protection conversations with younger clients to help them get the right cover for their needs.

“The industry still has work to do to tackle consumer scepticism and a lack in confidence in the industry,” she added. “Cost remains a barrier to buying protection, especially for those who are more financially vulnerable such as renters.”

She suggested advisers and providers need to find a way to engage with people who are least able to deal with financial shocks and show them the value of advice and the importance of protecting their incomes.