Over a third of people (39%) are more likely to buy protection insurance as a result of their experience during the pandemic, research from Hymans Robertson has revealed in its 2021 Protection Report. The main reason for this increase was due to people seeing the impact of the pandemic on the health of others the findings show. The report also found that price remains a primary driver for whether the protection insurance is actually purchased, with almost a third (31%) saying they haven’t taken on these type of policies because they think it would be too expensive. This makes it all the more important for insurers to highlight the benefits of protection and to show that it can be affordable claims Hymans Robertson.

The research from the leading pensions and financial services consultancy also found that value-add services, increasingly common in recent years, were often a leading factor in encouraging people to purchase a particular policy over another. According to the report, the most popular addition was legal services with over a third (34%) citing this as something that would lead them to buy a policy. Health and wellbeing services were the second highest in popularity with 27% citing this, closely followed by access to virtual GPs with 26% of people claiming this would make them favour one policy over another. Nutrition and dietary advice were the lowest ranked option, cited by only 15%.

There was a vast difference of opinion about these services depending on age, with about 1 in 10 (12%) of over 55s saying value add services would make no difference, compared to under 35s who claimed at least one option of value added service would influence their purchase.

Commenting on the increasing interest in protection insurance and importance of value-add services as part of the protection ‘offer’ from insurers, Karen Brolly, Head of Products, Insurance and Financial Services, Hymans Robertson, says:

“It isn’t a surprise that the turbulence of the past 18 months has led people to re-evaluate their priorities and look at whether additional protection could be worthwhile. The focus on health has undoubtably brought this into sharper focus. Yet, despite the demand, cost will always be a consideration so this is something that insurers must be mindful about.

“It’s clear however, that value-add services are increasingly becoming the norm for protection insurance products. The popularity of each different type of services is key to whether, from an insurer perspective, they are a success. For some, the value-add service may be even more of an incentive to buy the product than the original protection insurance itself. Access to legal or health services, for instance, alongside a life insurance policy could give it more comprehensive appeal.

“In recent years we’ve seen challenger banks force the traditional banks into transforming their outdated offers to keep consumers engaged. Being innovative and forward-thinking about value-add services could be insurers’ way to prevent these new players pushing them out through such a revolution. Our research indicates that consumers are beginning to realise the benefits of those services currently offered in the market. But there is some way to go. It’s vital for insurers to make sure the services added to products are meeting customers’ needs, expectations and demands for real value.”

The 2021 Protection Report also showed that nearly half (48%) of those renting privately or living in social housing had not held any protection insurance in the past five years. Of those that held a protection insurance policy in the last 5 years, the key motivator cited for the purchase was buying a house. One of the biggest drivers for taking out protection such as life insurance is clearly still having a mortgage. Those who do not own their homes are often missing this natural prompt to discuss their protection needs.

Commenting on the need for the industry to adapt to changing life choices to ensure consumers understand the benefit of protection, Karen continues:

“Many people no longer purchase a house in early adulthood or remain in the same job for life, so some of the traditional models used by insurers and advisers communicating the benefits of protection must be updated. Insurers should offer more flexibility in protection policies. By doing so this will allow changes in employment, housing ownership, family status and any number of other personal situations to be recognised and increase the opportunities for consumers to consider their needs.

“There are still many reasons why consumers don’t buy protection insurance. In our research of those who said they did not hold any protection insurance over the last five years, almost a third (31%) said this was because they thought it would be too expensive and a further quarter (25%) did not consider themselves to be at risk. The barriers that people put up as reasons not to buy protection – not only cost but also a perceived lack of risk - underline the need for a renewed focus on education about the broader value of protection products.  There is so much that insurers and advisers can do to educate consumers about the importance of having appropriate protection insurance in place, and assessing financial resilience in difficult times, such as those brought about by the pandemic, can help to bring protection needs to the forefront.”