Here are 5 of the most interesting Income Protection Insurance statistics we have uncovered in the past few years. A policy we hugely believe in and one that unfortunately gets far less attention than it should.
These statistics have been mostly compiled from Drewberry’s 2018 Protection Survey and our 2018 Employee Benefits Survey, which both contain the latest UK statistics on wealth, employment, and protection.
The UK’s self-employed are in need of Income Protection more than any other workers due to their lack of sick pay and any employee benefits, yet just 9.4% own a policy.
As such, it’s clear that Income Protection is not a particularly well understood insurance product compared to something like Home Insurance, which is owned by as much as 70% of people.
More people own Mobile Phone Insurance (19%) than Income Protection Insurance – do us Brits have our priorities straight?
There are more than a few reasons why the uptake of Income Protection Insurance is so low, but one particularly concerning issue may be that nearly 1 in 5 self-employed workers believe that they aren’t eligible for Income Protection.
In reality, some of the top insurers offer specifically Self-Employed Income Protection with unique terms to make the policy more relevant to the needs of self-employed workers.
When non-policyholders were asked why they did not have Income Protection Insurance, 17.2% said that it was because they didn’t know it existed.
A lack of knowledge is one reason why so many people in need of a policy don’t have one. An alarming number of people have never heard of Income Protection Insurance and even out of those who have heard of it, many people don’t fully understand what it is or how it can help them.
One of the most common problems we have when recommending Income Protection Insurance is that people continue to mistake it for PPI and, due to recent cases of PPI being missold, are reluctant to consider purchasing a policy that although very different sounds similar.
This needs to change, but the only way to start encouraging people to take on this valuable financial protection is by first providing important education and making sure people are aware of it.
Independent Protection Expert at Drewberry
We asked people who did not own an Income Protection policy what was preventing them from taking one out.
The most common answer we were given by respondents was that Income Protection Insurance is too expensive, which is an interesting finding as many people simply aren’t sure what Income Protection entails in the first place.
Too clarify what they defined as being too expensive, we asked respondents to estimate the cost of an Income Protection policy providing £1,250 per month to a 35-year old non-smoker.
The average price people assumed is that it would cost an average of £42.09.
The real cost of Income Protection, however, is 27% lower than what the public estimated.
People often don’t realise that they can reduce the cost of a policy by selecting the right options, such as a lengthier deferred period, which can potentially make premiums cheaper than they first appear.
Trust in insurers continues to be an issue preventing people from purchasing invaluable insurance products.
Not only do people not trust insurers to sell them the right products, but they also don’t trust them to pay out when a claim is made.
The UK public estimated that an average of 42.5% of Income Protection claims were successfully paid in 2017.
This is a shockingly low estimate compared to UK insurers actual Income Protection pay out rates.
The top 12 UK providers that we have looked at actually paid out an average of 93% of their claims in 2017 and, according to ABI, UK insurers paid out more than £600 million in Income Protection Insurance claims in 2017 alone.
This is a serious issue that needs to be urgently addressed if insurers.
Bad practices like the mis-selling of PPI have created a deep mistrust and it may take more than just time to rebuild that important trust between the public and the insurance industry.
Independent Protection Expert at Drewberry
When asked what kind of employee benefits UK workers would be interested in, 34.42% said that they would be interested in financial support and education, which makes sense considering 59% of UK employees are regularly stressed about money.
The number of employees wanting financial support demonstrates a strange disconnect considering so many people want financial help yet so few people are picking up on Income Protection, which is designed specifically to provide financial support.
When asked which specific employee benefits they would like to have, UK employees cared more about having free snacks (24.1%) than they did about having Income Protection (23%).
The reason for this lack of interest in employer provided Income Protection may be primarily due to a lack of knowledge or understanding of Income Protection Insurance.
There is still a lot that people don’t know about Income Protection and knowledge remains the key to helping people find the right financial protection.
We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.
If you want to learn more about Income Protection or any other insurance products, feel free to get in touch on 02084327333.
Our advisers are on hand to answer any questions so you can make an informed decision when it comes to your financial protection.
Head of Protection Advice at Drewberry
I’ve held a policy with Drewberry for several years now. They are always friendly, insightful and offer great service.