The festive period has provided some much-needed distraction from the on-going cost of living crisis.
However, the various parties, as well as Christmas shopping, can also add even more strain to the household budget at this time of year.
To understand how customers are prioritising their household expenditure at the moment, Pacific Life Re carried out some research with 500 existing protection policyholders in the UK & Ireland in the run up to Christmas.
Specifically, we asked; given the current cost of living crisis, how they would prioritise a list of various expenditure items in order to make ends meet.
We found that paying the mortgage or rent was unsurprisingly the highest priority. This was followed by paying heating or energy bills, and then food shopping or other essential items.
Then in the middle of the list of priorities was house insurance, car insurance and protection insurance, alongside commuting costs.
Lower priority was going out to drink or eat, TV or music streaming subscriptions services, Christmas festivities, holidays, or last of all, shopping for new clothes.
Whilst many of us will no doubt be treating ourselves and our families over the festive period, we might still have a more watchful eye on the spending.
What's more, it seems protection customers are likely to prioritise their protection policies over other nice to haves where they can, recognising that it will be there for them and their families long after the current festivities.
In fact, only 1% said they definitely plan to cancel their cover in the next 5 years, underscoring the value they place on it, while a further 6% were unsure what they would do.
Of course, customers don't need to completely cancel their cover if affordability is an issue. In fact, we found around 7% of existing protection customers said they plan to reduce their cover to make premiums more affordable, on the basis that something is better than nothing.
On the flip side, 17% of customers said they plan to increase their cover over the next 5 years, to reflect their changing needs. So a positive sign that many customers are either content with the cover they have, or plan to increase it.
It also means with nearly a third of existing customers looking to make some changes to their cover (either up or down) in the next 5 years, there is value in insurers being flexible with their existing cover.
Certainly we have seen some activity this year to provide customers with even more flexibility in premium payments or introducing new Guaranteed Insurability Options, so they can more easily change their cover to suit their needs.
It also highlights the importance of advisers keeping in touch with their customers during these tough times to help them re-evaluate their existing cover to suit their current needs.
So whilst it seems there is no doubt protection remains a valued product by most customers, there is an opportunity for the industry to engage with customers and remind them of the support and flexibility on offer so they can continue to protect themselves and their families in these challenging times, and ensure they continue to have some protection in place for the future.
