Research shows advisers believe consumers are not addressing their protection needs early enough
Many advisers acknowledge that income protection is a hard sell, but research from Royal London has found the under-35s are a particularly difficult market to crack. The firm found 74 per cent of advisers felt younger people were addressing their protection needs too late in life, while 43 per cent said they struggled to attract clients under 35.
With younger people more likely to protect their mobile phones than their income, what can the industry do to make it more appealing?
Debunking the myths
The Royal London research suggests there are several barriers to younger people buying income protection, such as perceptions that because they are young and healthy, they do not need it and it is too expensive.
The firm’s protection specialist Jennifer Gilchrist says buying a property is often the first time people “bump into” income protection – and with government statistics showing the average age of first-time buyers was 31 last year, that milestone is occurring at a later age. “You should buy income protection when you start work, but young people think they are not going to get ill,” says Gilchrist.
As well as showing how cheap cover is when young and healthy, commentators say the longer-term cost implications of not having it need to be spelled out.
Grosvenor Consultancy IFA Alice Douglass says: “The main difficulty is that income protection can be seen as quite costly. It’s a case of illustrating the impact of not having it. We need to make it more visual.”
Douglass says the under-35s tend not to have much in savings, so need to be made aware that what little they do have will be quickly swallowed up if they cannot work and have rent to pay. Then there are the longer-term implications, such as missing mortgage repayments, which will affect their credit rating.
Making it relevant
Income protection needs to be made more relevant to younger people’s lives now, rather than seen as something they might only need at a future life stage.
Gilchrist believes it should be regarded more as a wellness proposition, with a focus on how the additional benefits, such as rehabilitation support and counselling services, can help people stay in work and keep earning, rather than allowing health issues to escalate and lead to time off.
Cirencester head of marketing Rebecca Hill says: “Having valuable additional benefits packaged with income protection, such as counselling, therapies, second medical opinion and a scheme of money-saving discounts and offers, can make it more appealing and tangible. People can then see how they can benefit throughout the life of the contract and not just at claim.”
Others see gamification as a way to help engage people at an earlier age. Zurich has used this approach with its Facequote initiative.
Head of strategic partnerships at the group Rose St Louis says: “You take a selfie, then the facial recognition wizardry predicts your age and gives you a quote for £100,000 of life insurance over a 10-year timeframe. You can see how cheap life cover is, and it’s a fun and easy way of engaging younger people with insurance.”
Many commentators highlight the need to engage with young people on their own terms, through social media or by making it easier to apply for income protection online.
“When the younger generation decide they want it, they want it there and then. They do research, see something and want to build a relationship with that provider and IFA,” says Holloway Friendly Society head of marketing Georgia D’Esterre. “Some of the products and propositions are more complex but we need to make income protection accessible, inclusive, simple and straightforward. We need to cut out the jargon.”
PRIMIS proposition director Vikki Jefferies says advisers have a key role to play: “Income protection needs to be a core part of the advice process – for clients of all ages.
“By starting conversations earlier, these products become an essential element of people’s finances, rather than a last-minute add-on.”
However, London & Country head of protection Lucy Brown says young people are unlikely to consult with an adviser or even be at the stage where they are buying a property.
“In order to engage with young people, we need to improve on education, as well as giving more thought to the triggers that help people to look at the product,” Brown says.