Protection premiums are lower the younger you are when you take out cover. But most advisers do not see potential protection clients until they take out their first mortgage at an average age of 35. How can we get younger people to engage with protection insurance before then?
Mark Anders, Friends Life
It’s no secret that as an industry we need to work on raising awareness of the need for protection.
In its purest form, protection is about mitigating the impact of unforeseen and potentially devastating events both during work and in retirement. It is not something anyone wants to think about, as most of us would much rather ignore the negative impact of injury or serious illness.
Given that insurance rates tend to increase with age, we should arguably be looking at our protection needs when we are young and healthy. But getting that message across can be difficult; as an industry it is our job to ensure that we reach out to all those who need protection, regardless of their age.
Maybe we stumble at the first hurdle when we open a conversation around life insurance where the focus is death. It is not a comfortable subject for anyone, and it simply does not resonate with the younger market.
With this age group, the focus probably needs to be providing financial support because of illness or injury.
Younger people may well feel that they have no financial commitments in terms of marriage, family and mortgages, but may not consider direct debits taken from their bank account each month, rent, gym subscriptions, utility bills and car loans as financial commitments.
While protection covers the very areas that the public would prefer to ignore, the fact remains that real life is often unpredictable and significant issues can arise without notice, regardless of age. A clear understanding of the implications of not having protection in place should lead to a far more informed customer decision and a process of education should lead to an increase in take-up among this population.
Roy McLoughlin, Master Adviser
There is an education piece around those in their 20s and 30s checking what they are covered for at work. Nobody knows what sick pay they get from their employer, and invariably it’s worse than people think.
The FCA is not keen on young people getting life cover. They think there is no guarantee on them having children or a mortgage. The obvious advantage is that it’s incredibly cheap if you take it out at a younger age.
I think the focus should be on income protection and critical illness. The resistance you are going to come across is young people looking to pay off debt. But that said, there is an argument that if you have a lot of debt, potentially you can insure it.
I think the stronger argument is that people in their 20s are off work ill, so income protection and critical illness are very important.
Part of the key to reaching young people is auto-enrolment. Suddenly, every person in the UK will have to talk to an adviser. These opportunities will open up dramatically because a 22-year-old will be in auto-enrolment, so advisers will see more people than before. There is an opportunity to talk about protection.
One of the reasons a lot of young people do not have protection is that people do not have taken the time out to talk to them about it, so really the profession is at fault. Let’s not focus on waiting until people are in their 40s.
