Life is often referred to as a game where people decide to either play it safe or take a chance. But, asks Kirsteen Grant, are they assessing their risk correctly?
Even though consumers indicate they want to save more, many are now using available funds to reduce their debt to avoid financial problems and improve their credit score.
Protection products were not seen by many as a solution to provide a safety net to give them the security they need. However, the emotional need for protection is there – earlier research showed that 49% of people are now more likely to protect themselves and their family’s income and health. We, as an industry, need to capitalise on this willingness to help support consumers along with raising awareness of the products available and the benefits they can deliver.
What do they want?
What is important to consumers in provider selection? Financial stability and reputation is top priority; consumers want to know that they can trust a company to support them and be there to provide the benefits of their policy if they need to claim. Reputation is important and, with the internet and friends and family remaining the leading sources of information gathering, delivering our messages both clearly and positively would support referrals and reputation.
Price competitiveness and product features and benefits followed closely behind reputation in the order of priority. For those that had never held a policy, price would be a top priority for selecting a provider.
Whereas, price was the least important issue for those currently holding products, reflecting possibly their understanding of the value of the product. There is still work to do to for those who have never held products, encouraging them to look further than price when buying products.
When asked where they last purchased a protection policy, the research showed there was a growing trend for people purchasing through their employer; this could be due to the perceived ease of buying through this channel.
Employees tend to trust their employer to do what is best for them and would not necessarily challenge or compare products offered through this channel, rather accept them purely on face value.
Banks and building societies and IFAs are still the preferred purchase channels ahead of online solutions and comparison sites. However, the landscape is likely to alter with the changes expected from RDR to have a knock-on effect for protection sales. Online sales are likely to increase as more and more people use the internet as an everyday tool.
Critical to any successful product is the emotion that drives people to buy it and the value they believe it provides. When asked what type of cover people consider important, a significant proportion of a mixed group – including people who currently hold, have previously held, and have never held protection products – recognised the benefit of them.
Those who held products highly valued their cover for long-term illness or accident, unemployment, heart attack, cancer or stroke and death. The more worrying results for the industry were those that used to hold who still professed a concern about these life events and rated their importance quite highly (see graphs one to three below).
