Britain's changing demographic make-up is removing the traditional protection trigger points - and adding new ones. Mark Jones explains.
A recent LV= study showed many children are relying on their parents financially, much longer into adulthood. Young people are leaving university with large debts, youth unemployment is high and property remains unaffordable for many.
Parents on average do not expect their children to be financially independent until age 38, with a large number saying they always expect to provide regular financial assistance to their offspring. So we could have a large number of people hitting retirement age with similar financial protection needs to those of a much younger family.
Compounded by the fact that people are buying houses later, and having children later, it is likely that people will also carry debt much later into life than is currently the case. A lot of parents won’t have considered how their kids would continue to cope if they could no longer support them financially.
We also know that people will continue to work much later in life. Among today’s over-50s a considerable 6.5 million people expect to continue working past the current state retirement age. With the government increasing the state pension age we would hope that those approaching retirement would not feel they need to continue to work beyond it.
But clearly many find they have insufficient funds in their pension pots. While there are of course many people who feel too young to retire and want to work for as long as they can, the majority in our research said they will be forced to do so to continue living comfortably. And clearly many will still be supporting their dependents at that point as well.
Whatever people’s stage in life is, whether they have delayed getting married or having children, or have both by 20, the need to look after number one, or provide adequately for your family doesn’t change.
Our most recent ‘cost of a child’ report shows that from birth to 21 it now costs a staggering £222,000 to raise a child on average, which gives a sobering idea of the level of financial responsibility that comes with bringing up a family at any age.
While the changing demographic we are seeing poses significant challenges in many ways, can it also bring an opportunity to the protection industry? The Gender Directive has shown that the protection industry can innovate and respond to demands, and turn challenges into a positive way of engaging people in the need to financially protect them and their family.
Regardless of the next ‘big thing’ facing the industry, communication remains key.
The future looks far from a post-gender damp squib, and while it may be unlikely that we will see the record-breaking sales the end of 2012 brought with it, we can work to make 2013 a bumper year for protection in its own right.
Mark Jones is head of protection at LV=
