Why are today's consumers so vulnerable to imagining levels and types of protection cover that they in fact do not possess? Kirsteen Grant examines the research.
Consumers are genuinely confused about the cover they have purchased. Especially if, after an often lengthy selection process, they wonder whether they actually bought something close to their expectations.
Protection products are designed to support people in the long term though life's eventualities. This disconnect means many purchasers either forget about it or, over time, imagine the cover to be something quite different - all while still believing their needs are taken care of.
But The ‘something is better than nothing' approach can have detrimental effects on consumers if they don't have the right product in place when they truly need it. Is this why so many believe they are covered, when in fact they are not?
This detached attitude is not unique to the protection market. If asked, most consumers would not know the details of sickness or death in service benefits offered by their employer.
More worryingly, most are unaware of what financial support they would be entitled to from the state. The benefits of advice come into force here. A fact find can establish the consumer's financial position and bring clarity to areas that they have left themselves exposed to.
A PUZZLING SITUATION
The Syndicate's recent research report It's All Down To Choice: Defining Tomorrow's Consumer found that the recent government reforms and continuing economic uncertainty are providing the impetus for people to purchase protection insurance.
Fewer than 50% believed the state should support their financial commitments, reflecting the shift towards self-reliance. More than 50% felt that ministers should support them in times of long term disability or illness. This is an area where the protection industry could help ease the burden with established products already in place.
The need to create a level of protection is there. One in five are saving for a rainy day and with limited state support it could be argued that this presents an incredible opportunity for the industry.
When asked what would be the best way to get people to understand and appreciate the value of protection, 41% responded ‘increase awareness of the limited support provided by the state to help people understand what cover they need to protect themselves'.
For those that have actually purchased a policy, there are many who are infrequently contacted once a policy is in place. The only reminder they have of their cover is a direct debit being taken or through a financial review with their adviser.
