Given the integral role that protection now plays in the average mortgage broker’s proposition – not to mention the proportion of their business it now accounts for – I’m always interested to see what the public’s perception of such insurance and cover is. Britons do seem to have something of a complex relationship with protection after all.
In some quarters there exists a mindset that insurance is an unnecessary and unwanted additional expense when purchasing a product or financial service. As the credit crunch hit and people looked to pinch the pennies, insurance was seen as an area where the corners could be cut. I shouldn’t have to spell out what a false economy this is, but safe to say the money saved each month probably seems inconsequential when a phone needs replacing or a job is lost and mortgage repayments need to be made.
Therefore, this interest was piqued by recent Bright Grey research which suggested the overwhelming majority of the younger generation would not consider taking out insurance. While the carpe diem approach adopted by our youth is enviable in many aspects of life, adopting such a short-term attitude when it comes to finances and protection is sheer folly.
The Generation Now report didn’t just focus on those in their teens and twenties and actually polled respondents up to 40, finding that 25% prefer to concentrate on the here and now. The ‘it won’t happen to me’ mindset is even harder to fathom when you consider this is a generation more plugged into the media mainframe than any before it and hence more aware than ever of the perils of forgoing protection.
The results of this survey add further credence to the calls for financial education in schools. It’s all very well demonising those who rack up thousands on credit cards or neglect to take out insurance, but if they aren’t first given the tools to understand the benefits and pitfalls of the products and services available to them it’s not surprising that so many people end up in a pickle. Incorporating a simple module into the curriculum which covers off the basics and includes case studies so people can understand first-hand what could happen to them would not only benefit the individuals themselves, but would also create a generation of savvier borrowers and investors that would make life easier for the nation’s advisers and lenders.
Advisers themselves have an important role to play in highlighting the importance of insurance too. We constantly remind our appointed representative firms how crucial protection is and have put a panel in place that makes it simple for our members to offer insurance to their clients. For many it has become second nature to discuss protection needs with their clients, but those neglecting to mention it must ensure it becomes part of their sales process.
The whole PPI mis-selling scandal may have frightened some advisers off from including insurance in their proposition, but the way things are headed regulation wise, they could find themselves in just as much trouble if they leave their clients under-protected. By at least offering insurance and notifying their clients of the available options, they can rest easy themselves knowing they did everything possible to protect their client in any eventuality.
Richard Adams is managing director of Stonebridge Group