While two in three to UK adults admit they would struggle financially if they were unable to work, seven in 10 have never investigated buying income protection.
This is according to research conducted for Aviva by Censuswide with 1,002 UK employees of working age – aged between 16 and 65, and in full or part time work.
Respondents did not currently hold a personal income protection policy and a minimum of 250 were in the Gen Z bracket – aged between 16 and 27 years.
Financial struggles
The research found 67% of UK adults surveyed said that they would struggle financially if they were unable to work.
However, more than seven in 10 (71%) UK adults said that they have never investigated getting an income protection product.
Of these, around one in five (19%) said they had never heard of the product. This rose to a quarter (25%) among the Gen Z demographic.
Just under half (47%) of respondents said that they would rely on their savings to cover their living costs if they were unable to work due to long-term sickness.
Slightly fewer (44%) would cut back on non-essential spend and a third would control their spending by shopping for lower-cost brands.
Around two in five (40%) said they would look to find money from elsewhere – either by borrowing from friends or family (17%), relying on someone else to pay the cost (17%) or by taking out a bank loan (6%). Just under a third (32%) say they would rely on state benefits.
Barriers and triggers to buying income protection
The research also reconfirmed two known barriers to buying income protection – perceived cost and lack of awareness.
More than a quarter (26%) of people said that they did not think that they could afford the product. A similar number (23%) said that they did not think they needed it.
But more than a quarter (27%) said that they may investigate income protection in the future.
About a third of the people surveyed said that they would never consider taking out income protection. (32%)
While buying a house (36%) topped the list of key life events when individuals would consider buying income protection, fewer than one in 10 (9%) people said that they would consider taking out income protection when they moved into a rental property.
More than half (55%) of Gen Zs, who make up a high proportion of renters, said that they may consider taking out income protection when they get older.
Much needed safety net
Daren Boys, protection portfolio distribution director at Aviva, said: “Our research confirms that most people recognise that they’d struggle financially if they were unable to work due to ill-health, however, there’s still a heavy reliance on savings or family members to cover their living costs.
“Income protection provides a much-needed safety net,” Boys continued.
“However, Aviva’s research confirms that lack of awareness continues to be a key barrier to income protection sales.
“Although people are more likely to consider income protection when they buy a house, very few people would think about taking out an income protection policy when they move into a rental property.
“There’s a real opportunity for advisers to help explain the benefits of income protection for those who are renting.
“This can open the door to starting conversations about income protection with the younger generations now, rather than needing to wait until individuals reach traditional milestones like buying a house.”