The third Scottish Widows Consumer Protection Report, which details research carried out on 5,148 UK Adults, shows that many are continuing to shun protection products including life insurance, critical illness cover and income protection.
Although over half of the UK population (54%) admit to reviewing their finances once or twice a year and awareness of protection is high, the reality is that the take up of these products remains exceptionally low. From those surveyed, 97% were aware of life insurance and the importance of having it, however only 44% had cover. Similarly, when it comes to critical illness cover the awareness remains high (86%). However the percent of respondents who have actually taken out a product is worryingly low at just 12%. The same goes for income protection insurance where the awareness is 83%, with take up at just 7%.
The research also shows that almost a quarter of the UK population (23%) say they believe they cannot afford life insurance and when it comes to critical illness cover 26% state this as their primary barrier to not taking it out.
A worrying trend, according to Scottish Widows, is that many material goods (e.g. internet broadband) are seen as ‘essential', whereas insuring income in case of illness is seen as a ‘luxury'. 69% of respondents said their broadband was essential to their day to day living and 55% stated their mobile phone. In contrast just 35% said ensuring their financial security if they were unable to work was essential. Just 15% of respondents said they would consider cutting back on broadband internet access, whilst a fifth said they would be prepared to cut back on critical illness and life insurance.
Clive Allison, market director, protection at Scottish Widows commented: "We realise that many people do not like to plan for the unknown, however the importance of doing so cannot be underestimated. Our research shows that the majority of people clearly understand the benefits associated with protection products such as life, critical illness and income protection, but that many still don't adequately protect themselves, their families and their homes.
“The industry still needs to do more to highlight these benefits to ensure take-up increases, especially in an environment where welfare provision is being eroded, and Government is promoting the need for greater self reliance."