Consumers believe they have much more protection than they really do, according to Swiss Re technical manager Ron Wheatcroft who believes this “reality gap” will make closing the £2.3trn protection gap even harder.
Swiss Re conducted interviews with 1,000 18-60 year olds and found 57 per cent of the sample believe they have life insurance in place, with an average sum assured of £120,000 but, in reality, only 27 per cent of the respondents were covered.
Speaking at the Association of British Insurers’ conference, Closing the Protection Gap to Improve Finan-cial Security, held in London last week, Wheatcroft poin-ted out to delegates: “There is a huge reality gap. Forty-two per cent, or 11 million people, think that they have income protection and many expect to earn three-quarters to 100 per cent of their previous earnings. But the real number with income protection is only 3.5 million to four million people.”
Wheatcroft said employee benefit schemes, which account for 40 per cent of life policies and 60 per cent of income protection policies, are invaluable to the industry but a huge majority of consumers have no idea over what insurance is provided by their employer.