How do we solve the protection gap?
The recent FCA Financial Lives data reveals that two thirds (65%) of UK adults have no life insurance or other protection cover, including a significant proportion with a mortgage and/or financially dependent children. While four in five (82%) of all UK adults have at least one general insurance product, more people take out breakdown cover (36%) than life insurance (28%).
The survey also found that almost 12 million of the people with insurance or protection products would ‘go for the cheapest’ rather than compare the coverage of different products.
Contemplating life’s worst-case scenarios can be difficult, but ensuring you and your family are financially secure whatever happens is vital. Yet just a third are covered for redundancy, illness or death, despite the potential financial implications of these events. Advisers can help by encouraging clients to plan for all eventualities, using technology to create joined up processes, like linking protection with mortgage sourcing to enable single data capture and multiple product sourcing. And using platforms that compare features as well as price, along with automated document creation and storage. We've recently seen significant numbers of quotes and a 5% year-on-year increase in applications for term life and life with critical illness through IRESS’ comparison and quote portal, The Exchange. This is encouraging and we would hope this will translate to redressing the balance found by the FCA.
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