Consumers expect their adviser to talk about accident protection and many do not understand cost and cover, according to research from National Friendly.
Three-quarters (74%) of consumers would expect an adviser to discuss protecting their income from everyday accidents as well as illness and loss of life as part of their protection needs, climbing to 81% of Gen Z and 84% of Millennials.
The majority (58%) of the 5,000 Britons surveyed would expect advisers, platforms or banks to advise on accident-only protection plans when discussing income protection (IP).
This rose to 62% among Gen Z respondents born between 1997 and 2012, and 67% among Millennials born between 1981 and 1996.
Of consumers who already had an adviser, half (50%) said it was likely they would discuss accident-only or short-term injury income protection with their adviser, versus focusing solely on life or critical illness cover.
This rose dramatically among younger consumers, with 78% of Gen Z and 77% of Millennials saying they were likely to have this conversation.
In its Bruised Britain #2: The Mishap Gap report, the insurer identified four factors for realising the potential of non-traditional cover:
- Better consumer education and awareness about product value and reliability
- Addressing cost misconceptions
- Broadening protection conversations beyond death and catastrophic accidents or illness to include the financial impact of everyday accidents
- Creating affordable, flexible, accessible products that meet diverse needs.
Affordability
The survey found half (49%) of consumers who were interested in IP would consider a policy that only covered them for accidents if it was available at a cheaper price – rising to 56% of Millennials.
But price sensitivity emerged as a key theme, with 30% of all consumers saying affordable or lower pricing would make them more likely to buy accident cover, rising to 37% among Gen X respondents born between 1965 and 1980.
However, the research also indicated 40% of consumers had no idea what accident-only plans cost.
On average, consumers estimated premiums of £27.80 per month, with younger people assuming higher premiums of £29.90 while 23% of consumers estimated £30 per month.
However plans can start from £7.50 a month.
Confusion around options
While 61% of consumers claim to have heard of accident protection – rising to 67% of Gen Z and 65% of Millennials – the research identified many barriers to ownership.
This included the perceived cost (32% of consumers, 39% among Gen X), while 16% did not trust the product to pay out and 10% remain confused by the options available (rising to 16% among Gen Z and 15% among Millennials).
Around 10% had never heard of accident protection plans, 7% did not know where to get it (15% of Gen Z), and 5% reported their adviser did not suggest it.
To help engagement 16% wanted clearer explanation of what was covered and not covered, 15% sought transparency around exclusions (20% of Gen Z), and 15% wanted clear and simple policy terms (20% of Gen Z and Millennials).
The research found that 7% of consumers said they have standard income protection, rising to 9% of Gen Z and 14% of Millennials. Similarly, 7% had accident, sickness and unemployment (ASU) cover. Just 4% had accident protection, rising to 7% among Millennials.
National Friendly said its accident products had seen a growing appetite, achieving 136% growth in just six months and comprising 46% of its overall sales volume.
Critical disconnect
Graham Singleton, CEO of National Friendly, (pictured) said the research revealed a disconnect in the protection market with consumers – particularly younger generations – wanting accident cover to be part of the conversation, but many advisers were not routinely discussing it.
Consumers also fundamentally misunderstand what the product costs and covers.
He added that three in five consumers expect accident-only plans to be discussed if they seek advice about income protection but only 4% currently owned policies.
“This represents both a significant gap in consumer protection and a substantial market opportunity,” Singleton said.
“What’s particularly striking is the affordability angle. The challenge for our industry is to close the awareness gap and ensure accident cover becomes a routine part of protection conversations.”
