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Keith Richards: Govt must focus on addressing the protection gap

Keith Richards

A recent report has laid bare the scale of under-protection in the UK, revealing that half the country’s homeowners have no life insurance, while only one in five and one in 10 respectively have a critical illness or life insurance policy in force.

YouGov research, conducted for Scottish Widows, surveyed more than 5,000 adults and echoed a separate YouGov/Friends Life survey earlier this year, which additionally revealed that only 4 per cent of 2,031 people surveyed had income protection.

On the housing front, an alarming number of mortgaged homes are at risk of repossession because their owners lack protection insurance, with only 43 per cent fully covered for the debt.

We are a chronically under-insured nation, with the third-largest mortality protection gap in Europe – reckoned to be in excess of £2.4trn and growing.

It is estimated that 16 million people in the UK could benefit from some form of IP. Instead, only around three million policies are in force.

Millions of families are exposed, believing they can rely wholly on the welfare state in the event of financial hardship.

You may be familiar with ‘Prism’, the hierarchy of needs acronym, which places protection needs ahead of retirement, investment, savings and mortgages – priorities that need to be heeded urgently.

Government, regulators, protection providers and the advice profession have a collective responsibility to address the protection gap. It is a responsibility that needs the backing and focus of Government as rigorously as retirement guidance.

Keith Richards is chief executive of the Personal Finance Society



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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 22nd July 2014 at 9:53 am

    So what do you propose Keith? Might not restoring LAPR at 20% be a good start?

  2. The MMR affordability directive means having protection is not affordable anymore for the majority Keith.

    Where have you been?

  3. The MMR affordability directive means having protection is not affordable anymore for the majority Keith.

    Where have you been?

  4. This man Richards is unbelievable. The Government does not need to take responsibility for closing the protection Gap!!!! What needs to happen is of the Government and regulators to bog off and leave us alone to get back to selling protection by the bucket load with a very simple pre sales and post sales process that takes half an hour to complete. No one will ever convince me that the old sales forces which sold £5 or £15pm term/phi plans did any client a disservice or miss old anything. One could argue that value of some of these types of policies left a bit to be desired but having some cover was better than having none. Back in the day there were many hundreds of thousands of householders that had some form of protection. With the amount of time, effort and compliance involved in terms sales these days it is not worth doing for less that £50pm premiums, so yet again the Regulator has over many years increased the costs of doing this type of business and has priced a lot of families on average (or lower than average) incomes out of the market. I am not talking about mortgage protection stuff here I mean proper family protection. The Regulator can spout all it wants about how nasty advisers sell policies to consumers, but this stuff needs sold, its rarely bought. I reckon only around 10% of my client bank actually knew they needed life cover before we met. The vast majority of them no more wanted life cover than to have Stevie Wonder drive them in London traffic. It had to be sold and will always be the case in the in the main. Of the ones who knew they needed it, none actually thought they needed as much as I sold them until it was explained properly. I have never heard of any widow or widower who put a complaint in for having life assurance sold to them before the inevitable happened. Lets ignore these idiots who come off with this communistic trend statements of “Government must do this or that or the other”. Get real, get a life, get a proper job but most of all Get out of our faces and let us get on the case to sell this stuff profitably. Sales are the life blood of every single organisation in the world. None more so than in our business. The protagonists out there may say “oh I don’t sell I advise……”. Thats only a play on words. If you charge for time or your service it is that which is sold so please don’t come back and berate people like me who are proud to sell products. Like it or not you do sell. it may be the product you sell is your time or service. But you still have to sell it. The ones I sell are protection and I am proud of that. Without sales there is nothing else – no turnover, no profit, no future – no company.

  5. Quite recently, somebody recounted on one of these forums the story of a complaint made against him by a widow for having failed to sell her now late husband life insurance. In truth, the adviser HAD recommended life insurance but the husband had brushed it aside as something with which he didn’t wish to bother. The adviser’s rejection of the claim was ultimately successful but it took a long time and caused him a great deal of anxiety.

    For some strange reason, I have the greatest difficulty selling protection or, having done so, getting it to stick, but I’m always careful to recommend it (and record my recommendation) where I consider the client/s ought to have it. We may yet see similar complaints about alleged failures to recommend drawing up a will, even against advisers who don’t actually offer a will writing service.

  6. Capt Sparrow is right.

    What Mr Richards doesn’t seem to accept is that people are now being dragooned into paying for one size fits all pensions. Their incomes have not materially increased for 5 or 6 years and now the CII recons they need to spend more on other financial products. What? At the expense of reducing their debt? Yes I know the Govt wants us all to be in debt as it makes their dodgy GDP figures look good.

    But come on get a grip and live in the real world.

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