Nearly one in five workers without income protection (IP) have said nothing would persuade them to talk to a financial adviser about taking out cover.
This is according to a poll of 2,000 UK adults by Shepherds Friendly, which also found that only 16% of full-time workers have income protection insurance cover, up 2% on last year.
This is despite 81% of respondents without cover renting or having a mortgage, 44% with children under the age of 17 and 28% single and at a higher financial risk if unable to work.
When quizzed about what would get those currently without cover talking to a financial adviser, 28% said a free consultation, no broker fees (22%), clear, jargon-free advice (12%) and online reviews and testimonials (12%), while nearly one in five (19%) said nothing would persuade them.
Prioritising price
In terms of product features, 43% of those without cover said price was the most important in considering a protection product, while preventative care topped the preferred benefits.
Offering a range of health services designed to diagnose conditions ranked top with 26% alongside access to a virtual GP service (a rise from 22% last year and particularly valued by younger workers, peaking at 34% for 25 to 34-year-olds). Access to cancer screening and access to physical care such as a physio were joint second with 25%.
The importance of IP cover was reflected in the fact that one in five (20%) full-time workers aged between 18 and 64 experienced a period where they were out of work and didn’t receive their usual earnings – rising to 40% for those aged between 18 and 24.
Top concerns
The prime concern across all age groups was inflation and the rising cost of living (68%), especially among those aged between 18 and 44, citing it as the main factor threatening their income during the next five years. Fears of an economic downturn was the second-highest factor (60%), above illness and a long-term health condition (51%).
Artificial intelligence’s (AI) potential impact on job security was cited by 48% of respondents as a concern, while 46% feared accidental injury would impact future earnings, rising to 68% for 18-24-year-olds.
Overall, 38% of respondents expected factors outside of their control to affect their income within the next five years, with 21% saying it was unlikely, suggesting many workers were aware of the risks of losing income despite not having protection in place.
Lack of knowledge
Around 14% of respondents said they didn’t know what IP covers at all – 70% of those surveyed had heard of income protection as a product, with awareness increasing with age.
Misconceptions persist
However, misconceptions around what IP includes persist, with 41% of respondents who don’t have a policy thinking it covers redundancy – and 49% thinking lifestyle factors such as drinking alcohol regularly or existing health conditions automatically rule them out of cover, increasing to 57% for 18 to 24-year-olds. These misconceptions remain evident across every age group.
Significant opportunity
Dan Simpson, chief commercial officer at Shepherds Friendly, (pictured) said: “The findings from this year’s research suggest that low income protection take-up is not primarily driven by a lack of awareness. Instead, misconceptions about what the product does, concerns about eligibility and uncertainty about its value appear to be preventing many consumers from engaging with protection conversations.
“For advisers, this creates a significant opportunity: education, reassurance and clearer communication could help more clients recognise the value of protecting their income.
“Price remains the dominant purchasing factor, but health and wellbeing benefits are also popular. There is, therefore, an opportunity for advisers to demonstrate both the protection and wider support available through modern policies to help improve engagement.”