Eight in 10 renters and homeowners are without income protect: Shepherds Friendly

Almost eight in 10 (81%) of those renting or with a mortgage are without income protection insurance cover, Shepherds Friendly survey reveals.

The survey of 2,000 UK adults found that 44% of those without income protection have children under the age of 17 and 28% are single and are at a higher financial risk if unable to work.

The results found that only 16% of full-time workers have take out income protection, with only a 2% increase from last year.

When asked what would get those currently without cover talking to a financial adviser, 28% said a free consultation would be most enticing, followed by the knowledge there are no broker fees (22%), clear, jargon-free advice (12%) and online reviews and testimonials (12%).

However, nearly one in five (19%) said nothing would persuade them.

Product feature-wise, 43% of those without cover said price would be the most important in considering a protection product, while preventative care topped the preferred benefits.

Shepherds Friendly says the low income protection take-up is particularly revealing considering more than one in five (20%) full-time workers aged between 18 and 64 experienced a period where they were out of work and didn’t receive their usual earnings.

This rises to 40% for those aged between 18 and 24.

The main concern from all age groups was inflation and the rising cost of living (68%), especially among those aged between 18 and 44, citing it as the main factor to threaten their income over the next five years.

Fears of an economic downturn was the second-highest factor (60%), above illness and a long-term health condition (51%).

AI’s potential impact on job security was cited by 48% as respondents as a concern, while 46% feared accidental injury would impact future earnings, rising to 68% for 18-24-year-olds.

In total, 38% of respondents expected factors outside of their control to affect their income within the next five years, with 21% saying it was unlikely, suggesting many workers were aware of the risks of losing income despite not having protection in place.

Encouragingly, despite a lack of knowledge in some areas, 14% of respondents said they didn’t know what income protection covers at all.

Of those surveyed, 70% had heard of income protection as a product, with awareness increasing with age.

However, misconceptions around what income protection includes persist, with 41% of respondents who don’t have a policy thinking it covers redundancy and 49% thinking lifestyle factors such as drinking alcohol regularly or existing health conditions automatically rule them out of cover, increasing to 57% for 18 to 24-year-olds.

Shepherds Friendly chief commercial officer Dan Simpson says: “The findings from this year’s research suggest that low Income Protection take-up is not primarily driven by a lack of awareness. Instead, misconceptions about what the product does, concerns about eligibility and uncertainty about its value appear to be preventing many consumers from engaging with protection conversations.”

“For advisers, this creates a significant opportunity: education, reassurance and clearer communication could help more clients recognise the value of protecting their income.”

“Price remains the dominant purchasing factor, but health and wellbeing benefits are also popular. There is therefore an opportunity for advisers to demonstrate both the protection and wider support available through modern policies to help improve engagement.”