Communication is key when addressing consumer perceptions of income protection

Communication is key when addressing consumer perceptions of income protection
Communication is key when addressing consumer perceptions of income protection

Jamie Page


Head of Protection Distribution

For financial services professionals like you and me, we understand the products we work with and know the value they bring to clients. But our research shows that there is still a lack of consumer awareness of the need for and role of protection insurance.

We surveyed 2,000 working adults in the UK on their health and financial fears over the last 12 months and it’s clear that there’s still work we need to do.

Worries of UK workers

When asked what they were worried about, the top concerns were a continued rise in cost of living (75%), being able to pay utility or food bills (58%), paying mortgage or rent (52%), and losing income due to personal illness (47%).

You and I know that income protection is a valuable product that could ease some of these worries if someone suddenly became unable to work due to injury or illness. But only 13% of those we surveyed currently have, or are applying for, an income protection policy.

Affordability and value

Of course, affordability is front of mind for everyone with 87% of those surveyed changing their spending habits in some way during the last 12 months. 7% of respondents said they’ve cancelled an insurance policy and the top reason for cancelling was cost, with 26% stating affordability as the reason.

Consumers tend to overestimate the cost of these policies. The average estimated cost of an income protection policy from our research was £35.20, when the actual average cost was £24 for a two-year limited term benefit (the most popular cover purchased in 2022)1. But, while people overestimate the cost of protection, they also overestimate the level of state support available to them.

One of the most common objections you hear is that people will get enough support from the Government and Statutory Sick Pay. 32% of UK workers we surveyed believed they would receive more than £126 per week and 18% said they didn’t know what they would be entitled to at all. Currently, Statutory Sick Pay is only £109.40 per week for up to 28 weeks2 - under £450 a month - likely not enough to pay mortgage or rent, let alone all the other bills that come in each month.

Awareness of protection

It’s not just about affordability, though. Nearly half (43%) of UK workers surveyed that had cancelled a policy had done so because they hadn’t made a claim on the policy (24%), didn’t see any value in the policy (14%), or didn’t know what it was for (5%), showing a lack of understanding about what they had and why they need it.

And yet, our findings suggest consumers do have some awareness of income protection, only 6% didn’t think it was important. The top answers were spot on, with 19% feeling it’s important to consider purchasing when starting their first job, and 17% when buying a property or getting a mortgage. However, awareness itself only goes so far. It’s the mix of awareness plus fully understanding what income protection does and why it’s important that’s vital, and trust is also key.

Building trust

When we asked how confident people are that protection providers will pay a claim for income protection, life cover or health insurance over a third (34%) said they aren’t confident claims will be paid – up from 23% last year. Providers and advisers need to work together to build awareness and trust so consumers fully understand the need, what they’re getting with their cover and how they can get support from their provider when it’s needed.

That’s why we have recorded consumer duty videos for you to use with your clients and developed our Income Risk calculator. The calculator is a great visual representation of the impact of a loss of income due to illness or injury for a client, and now you can add your branding to the income risk report. If you haven’t used it with your clients yet, you really should.

Find out more

Want to find out more about the health and financial fears of UK workers? Read our latest research and get 30 minutes of CPD.



1. Swiss Re, Term & Health Watch 2023
2. www.gov.uk/statutory-sick-pay