Advisers have reported that their customers would rather spend their money frivolously than pay for protection.
A survey conducted by protection provider Cirencester Friendly found lack of awareness and education means many financial advisers are finding Brits do not understand the need for income protection. 67% of advisers surveyed said that their clients find it difficult to understand income protection while 30% said on the whole their clients aren’t clear on what income protection actually is.
When asked what they feel the main barriers to sell income protection are, 39% of advisers said customers don’t think they need it, 33% said the cost was an issue and 12% said there was a lack of client understanding.
John Bridge, director of sales and marketing at the mutual, said: “The responses we have received from financial advisers show there is a need for more education and awareness for consumers when looking into protection products. Some advisers have said they have found their clients would rather pay for satellite TV than spend money to protect their family. There has been a clear culture shift in the last 10 years in the UK, and it is interesting to see that these days many will insure their pet rather than their income or family.
“It’s disappointing to see that so many people still confuse PPI with income protection. Unsurprisingly, negative press around the PPI product has made consumers more wary of any protection product, but more needs to be done to educate consumers on the differences between PPI and other protection products in the market and why it is important to protect yourself from illness or accidental injury.
“According to Health and Safety Executive – over the three years 2009/10 to 2011/12 there were an estimated 638,000 people annually who suffered a workplace injury and an estimated 500,000 people annually who suffered a ‘new’ work-related illness. When answering our annual survey, advisers said they found many consumers believe if they suffer an injury or illness the Government will pay them.
“While the government may pay you some benefits, it does not mean you will receive your usual salary. If for example you look at Employment Support Allowance a claimant may receive as little as £100.15p per week to pay the mortgage, bills and provide things like food and clothing for their family. When you consider that the average weekly income in the UK is around £398.28 after Tax and National Insurance you can quickly spot the financial difficulty this would leave someone in.
“Income protection does what it says – it covers a person’s income should they be unable to work and earn a living due to illness or injury providing a regular income to cover bills and the cost of living. In my opinion it is as essential a product as buildings insurance and anyone who relies on earning an income to pay the bills should have it.”