Covid-19 was the main reason for more than half of the UK’s income protection (IP) policy purchases last year and it is expected to remain a key force pushing consumer decisions for the long-term.
GlobalData’s UK Insurance Consumer Survey found 52% of UK consumers in 2021, compared to 37.4% in 2020, said their decision to buy income replacement insurance was influenced by the pandemic.
The data also revealed accident and sickness cover was the most purchased type of income replacement protection policy in 2021 with a 44.6% purchase share.
Of all the protection products bought by respondents covering income and disability, 55.4% provided cover against redundancy.
Commenting on the findings, Beatriz Benito, senior insurance analyst at GlobalData, said: “Individuals have become increasingly wary about the unprecedented events of the last two years, rethinking how best to protect themselves now and in the future.
“The UK’s furlough scheme prevented mass redundancies, yet many individuals still felt the financial squeeze. Some consumers may feel more vulnerable to job losses and health concerns than in the past and are therefore examining ways of protecting themselves in an uncertain economy.
“Equally, the pandemic has increased awareness about the importance of health and wellbeing. Many individuals may not have the funds to support themselves or their families if they were to fall sick and be out of work and short of income for an extended period of time.”
Benito noted that had insurers not temporarily withdrawn unemployment cover soon after the onset of the pandemic the proportion of policies accounted for by unemployment cover would be significantly higher.
And he added that the force of the pandemic was unlikely to end soon.
“While societies around the world learn to live with the virus, new variants continue to create economic uncertainty, impacting consumer behaviour. As such, Covid-19 will continue to drive interest in income protection products over the medium to long term,” he said.