The cost of living without protection

Britain’s cost-of-living crisis has hit us hard, and with ever increasing retail and energy prices affecting millions of households, protecting our income is now more important than ever.

It’s no secret that the cost-of-living crisis has hit Britain hard in different ways. Inflation has risen to its highest level in 30 years(1), shoppers have been hit by the highest price increase in 10 years(2), and we’re now experiencing a 54% increase in energy bills affecting 22 million households(3).
The latter in particular has dominated the news headlines in recent weeks, with a YouGov survey revealing that the majority of Britons (82%) have noticed an increase in the cost of their gas and electricity bills4. And, with heart breaking stories about pensioners riding a bus each day just to keep warm whilst limiting themselves to one daily meal, it’s not surprising that people are pessimistic about the future, with four in ten Britons expecting their finances to get even worse in the next 12 months(4).

Consider the impact on protection
More than ever, your clients’ income will be precious to them, and protecting that income is now even more essential. Your clients may consider protection as being a ‘nice to have’ – maybe it’s not something they’ve ever thought of as an essential expense, or it’s one of the first things to be ‘cut’ when revising the household budget. After all, why should they keep paying for something they may not need? And would the insurance even pay out anyway?

Consider the situation if your clients became sick or injured. How would they cope with having even more financial (and not to mention emotional) strains of not being able to work and at the same time still trying to pay ever increasing prices in order to get by day-to-day?

2021 claim figures
Taking one insurer as an example, Royal London paid out 90.4% of all Income Protection claims in 20215.  And maybe surprisingly, the average age at claim for Income Protection was only 38, indicating that a higher proportion of younger people are impacted by sudden illness and injury6.
What’s more astounding is that the average time a plan was in force before a claim was made was only 3 years, 7 months6. This highlights how important it is for your clients to consider what would happen if they were to cancel a policy they’d already had in place for a few years, thinking they’d never use it.

To this point, when watching morning TV recently, members of the public were phoning in to discuss the cost-of-living crisis. I was listening to one male caller, clearly upset when telling his story. He’s currently off work sick as he suffered a back injury and therefore can’t do his normal job, which is physically demanding. As a result of this, and further exacerbated by the inflated prices of everything, he’s not coping financially or mentally, and is really struggling with life.

If the caller had Income Protection in place, this may have alleviated some of his financial concerns and given him more hope for the future.
So, while you may find yourself coming up against even more objections from clients when you discuss the expense of protection, the current economic climate means that having a plan in place is more essential than ever.

Sources:
1 Office for National Statistics
2 British Retail Consortium
3 Ofgem
4 YouGov
5 Royal London protection business claims paid (1 January to 31 December 2021).
Figures include claims already being paid at the start of 2021 that we continued to pay throughout 2021.
6 Royal London UK intermediary protection business claims paid (1 January to 31 December 2021).

Author: Jo McIntosh, Marketing Consultant, Royal London