Britain's changing demographic make-up is removing the traditional protection trigger points - and adding new ones. Mark Jones explains.
Many protection providers had a bumper end to 2012. The onslaught of the EU Gender Directive provided a boost to applications. We all spent a large part of 2012 talking G-Day strategies, the need for advisers and consumers to take note of the imminent rise in insurance premiums and act, but what for 2013?
We could go back to talking about the everyday triggers that encourage people to take out protection, like buying a house, getting married, having children and so on, but is our society changing at a pace that means in the coming years we will not be able to rely as heavily on such ‘milestones' to help close the protection gap?
LV= research shows that by 2025 we expect a first-time property buyer to be 41 years old, a big leap from the 1980s when people bought their first house at age 29.
People will also marry later, at an average of age 34 for women and 35 for men by 2025, overtaking the average age of a first-time mother which we predict will rise to 29. This shows a growing trend of delaying lifestyle decisions, and placing more importance on having a baby, rather than tying the knot.
Typically, term assurance policies are taken out when people reach these milestones, while the stagnant property market in particular has meant that fewer people are getting on to the property ladder, while others are not progressing up it.
Lack of movement in the property market has resulted in a fall in the number of consumers considering and taking up term assurance.
This, coupled with the long-term trend of people delaying key ‘milestones', means we need to find a way of engaging people in the importance of protecting their lifestyle as soon as they have an income, rather than only thinking about protection when they have dependents, or debts such as a mortgage to cover.
The lifestyles people lead are highly important to them, in fact the average household in the UK spends over £6,000 a year on just their top ‘luxury essentials', such as holidays, meals out, TV subscriptions, the shop-bought daily coffee and so on.
‘Luxuries' spend up
Spending on life's little luxuries is actually on the up as well, the UK as a whole spent £9bn more in 2012 than in the previous year on these types of items, despite almost one in five people suffering a pay freeze during the same period.
Our research asked how people would change their spending if they suffered a loss or drop in income. Holidays and weekend breaks firmly topped the list of lifestyle elements they would be least willing to give up.
Many said they would refuse to give up their TV subscriptions or reduce spending on premium food at home.
