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?
Chris Hulme, Clayton Hulme
The effects of financial catastrophe are rarely learnt by any other means than direct experience.
As the experiences of serious illness increase and the social/health support mechanisms from local/health authorities retracts, the financial burden will bring this experience home to younger people.
It stands to reason that the experience will be led by the parents own planning against such adversity. (If the parent didn’t plan against it, how will the child know how to?)
Parents are the most likely entry into this discussion, but with only one in four having a critical illness policy, this isn’t the most widespread of education policies.
Tackling it by way of a children’s policy structure provided by parents could introduce children at a much earlier age to consider ‘being insured’ as the norm rather than the exception.
With more child cover options such as those from Pru Protect available, even if parents don’t cover themselves, there’s little a parent wouldn’t do to protect their children.
Taxation assistance (as we had with LAPR) could add a further level of encouragement across all age ranges and could be directed across many different product types than just life cover, which would alleviate pressure on stretched benefit systems.
It still falls to the parent to instil financial responsibility at an early age and set the example. Whether this is by having the cover to enable a claim to be made or not having the cover and a claim not being available, the learning experience and outcome for the child is most likely to be a similar one.
Donna Cowell, Aviva
Buying a home is a natural time for people to consider their financial responsibilities, but with more people staying in rented accommodation for longer, there’s a concern that the industry could be failing to meet their needs.
Rental customers are very similar to those with a mortgage. If the worst was to happen, there’s every chance they would want their family to stay in their home with the financial security to maintain their previous lifestyle.
Similarly, battling a critical illness while worrying about the bills is no easier for those paying rent instead of a mortgage. Aviva data suggests only 67% of families are home-owners, and the MMR and economic climate may well reduce this further.
In addition, starting a family – another key trigger for considering protection – is ever more likely to happen before marriage and mortgages, with one-third of children now born into rented accommodation. The rental market therefore offers huge potential for what seems a relatively untapped opportunity.
There is also the issue that people are hard-wired to think: ‘It won’t happen to me.’ This is possibly even more prevalent among the young. However, consumers are also becoming increasingly savvy, and for utility bills it’s commonplace to see people ‘lock in’ to deals so they can reap the benefits should prices rise.
If we can persuade younger customers to view protection in the same way and take advantage of the cheaper prices that come with relative youth, we may be able to ensure they get the cover they need.
