The Exeter: 67% worried about a loss of earnings due to COVID-19

More than two-thirds (67%) of the UK’s working population are worried about a loss of earnings due to injury or illness such as COVID-19, according to The Exeter.

Nearly three in ten (29%) are very worried, and 70% say the pandemic has made income security a bigger financial priority.

However, despite these financial concerns, less than one in five (19%) working adults protect their income through insurance, falling to just 9% for self-employed workers.

Anorak partners with Iress for regulated protection advice

An estimated 23% of those surveyed said they had never heard of income protection and 46% said they were aware of it but did not know what it covered or how it works.

Just 7% of adults said they had been approached first by an adviser about their requirements.

The research reveals that one of the main barriers in raising awareness of the importance of protection lies in the technical language and jargon using by the insurance industry.

Just half (52%) of those surveyed believe the language used to explain insurance products, such as income protection, is easy to understand.

Of those who already had an income protection policy or had considered purchasing it, more than one in four (26%) found it difficult to understand what the benefit of income protection was, what it covered and when it would pay out.

This rose to 32% among employed workers, compared to 20% of self-employed workers.

For those who found income protection difficult to understand, almost half (47%) said it was due to too much technical jargon, while 45% said it was because of unclear explanations of what the policy covered and 42% said it was unclear when or how the policy would pay out.

When asked to consider the term “protection” more widely, 53% of working adults said they associated it with protecting themselves from physical harm and 48% associated the word with legal protection.

Steve Bryan, director of distribution and marketing at The Exeter, said: “With the uncertainty of ongoing restrictions, many people are concerned about the impact on their finances.

“COVID-19 has shone a spotlight on the financial fragility of the UK’s working population and it’s clear from today’s findings that a significant proportion of people are worried about the impact of the pandemic on their income, especially if they unable to work due to illness.

“However, just 19% of working adults currently protect their income with insurance. Lenders and advisers need to be proactively engaging with consumers about their protection needs to make sure everyone gets the cover and security they need.

“The jargon and complex language which the industry is guilty of using is making it much more difficult to raise awareness of protection and means advisers face an uphill battle before they even start talking about insurance with customers.

“At The Exeter, we’re determined to change this and will be providing practical tools and training to work with advisers to overcome obstacles to having successful protection conversations.”