New research by consultancy Hymans Robertson shows that as many as 39% of consumers are now more likely to purchase protection insurance as a result of their Covid-19 experiences.
The company Hymans 2021 Protection Report also reveals that 31% of consumers have not purchased this form of cover due to perceived concerns over the cost.
The report also looked at what add-on features would encourage people to take out policies, and here the top answers were:
- Legal services (mentioned by 34% of respondents)
- Health and wellbeing services (27%)
- Access to virtual GPs (26%)
The under 35s were much more likely to value add-on services than the over 55s.
When asked what rewards would encourage them to favour one policy over another, the respondents cited:
- Retail discounts (33%)
- Free gifts (31%)
- Tech discounts (28%)
Less than half (48%) of non-homeowners said they hadn’t purchased any protection policies in the previous five years, suggesting that many people still see obtaining a mortgage as the principal reason to take out cover and aren’t convinced by the benefits of protection insurance for other purposes.
The 35-44 age group were the most likely to have purchased life insurance during the past five years (55%), and the most likely to have effected critical illness cover (29%). The 25-34 group was the most likely to have taken out income protection (26%). 60% of over 55s have not had any form of protection policy in the last five years.
When asked about how they would purchase cover, 46% said they would use a comparison website, 33% would go direct to the insurer’s site and 24% would consult a financial adviser.
2,000 people across the UK – from different regions, age groups, socio-economic groups and income classes – were surveyed.
Karen Brolly, Head of Products, Insurance and Financial Services at Hymans Robertson said:
“It isn’t a surprise that the turbulence of the past 18 months has led people to re-evaluate their priorities and look at whether additional protection could be worthwhile. The focus on health has undoubtably brought this into sharper focus. Yet, despite the demand, cost will always be a consideration so this is something that insurers must be mindful about.
“It’s clear however, that value-add services are increasingly becoming the norm for protection insurance products. The popularity of each different type of services is key to whether, from an insurer perspective, they are a success. For some, the value-add service may be even more of an incentive to buy the product than the original protection insurance itself. Access to legal or health services, for instance, alongside a life insurance policy could give it more comprehensive appeal.
“In recent years we’ve seen challenger banks force the traditional banks into transforming their outdated offers to keep consumers engaged. Being innovative and forward-thinking about value-add services could be insurers’ way to prevent these new players pushing them out through such a revolution. Our research indicates that consumers are beginning to realise the benefits of those services currently offered in the market. But there is some way to go. It’s vital for insurers to make sure the services added to products are meeting customers’ needs, expectations and demands for real value.
“Many people no longer purchase a house in early adulthood or remain in the same job for life, so some of the traditional models used by insurers and advisers communicating the benefits of protection must be updated. Insurers should offer more flexibility in protection policies. By doing so this will allow changes in employment, housing ownership, family status and any number of other personal situations to be recognised and increase the opportunities for consumers to consider their needs.”