While spiralling energy prices may affect consumer appetite to take out protection insurance over the coming months, advisers would do well to remind customers of budget cover options on offer.
Late last week regulator Ofgem announced its new energy price cap which will mean millions of households across the country face an 80% increase in their energy costs in October, taking a typical bill to £3,549 a year.
In response, Alan Knowles, co-managing director at Cura Financial Services, (pictured) told Health & Protection that he does not think there is any doubt that customer appetite to take protection will reduce from a budgeting perspective.
Although Knowles added advisers need to remember tools in their arsenal such as budget income protection plans and more basic critical illness plans.
“The main concern however is likely to be existing customers; when the budget gets tight you are more likely to pay for your home to be heated than to pay for your life insurance,” Knowles explained.
“Again advisers need to remember options to take cover breaks and reduce coverage for clients, after all some cover is better than none.”
Best summer to date
But according to Andrew Wilkinson, director at Moneysworth, while there is widespread concern about the energy price cap rise across the UK, he has not seen much evidence of these concerns feeding through to his business.
“We are just coming to the end of our busiest August to date and our best summer to date as well,” Wilkinson said. “This probably illustrates how strong the desire is for protection insurance among those living with health conditions and we have to remember also that many such consumers found access to protection insurance problematic during the pandemic. To date we have seen little in the way of existing policies being cancelled either which perhaps reflects the value placed on their protection insurance generally by people living with health conditions.
“However, it’s still early days and difficult to make predictions. No-one knows how bad things might become or how long the crisis will last for, especially against the background of the ongoing military confrontation in Ukraine,” Wilkinson added.
“One thing that is for sure is that the inflation and energy crisis, combined with the war and the general political outlook, have created a backdrop of anxiety and stress for millions. People are frightened by what they see and read in the press and on TV.”
Case for cash cash plans and EAPs
Marcia Reid, non-executive director at Sherwood Healthcare, said she thinks soaring energy costs and inflation only further the case for cash plans and comprehensive employee assistance programmes.
Reid’s comments came ahead of research from Canada Life which showed four in five (80%) employees feel their employer should provide support to help with rising living costs. The top ways employees are looking for support from their employers to help with rising costs are increase in salary (54%) and contribution to bills.
However, a quarter (27%) said their employer had promised to support employees with rising living costs but had failed to deliver. Additionally, nearly half (47%) said their employer does not realise the impact of rising living costs on the team, while a similar amount (48%) said the cost of living crisis is having an impact on their mental health.