The release of the latest LV = Resilience report once again highlights the disconnect between people who think that it is impossible to work through disease or disease and how it works in reality.
Nearly one in 10 people surveyed believe they are financially resilient. A very promising title statistic. However, in-depth doubts suggest that there may be a certain degree of wishful thinking.
Almost half of the respondents wanted to use savings and rainy days to keep them from working during periods when they were unable to work due to illness or injury. But this hasn’t come under much scrutiny, i.e. 42% of workers save less than £10,000, while one in 10 workers don’t save at all.
Perhaps the finding that all of us need to think about is that 77% of tenants have never met a financial advisor
After saving, a familiar partner relies on sick salary, partner’s income or state benefits. The ability to draw help from policies is a long way on the list, with only 7% of workers citing key income or income protection policies that they individually pay for because they will rely on.
It is worth noting that a larger percentage says that they must continue to work even if they are sick or injured.
First time buyer
The report provides insights from different core groups, including first-time buyers (FTBs).
FTB is still confident in its resilience, even if one-third saves less than £5,000, if they don’t have income, only more than half of them can manage for two months. More than half of respondents said they needed two incomes to meet their monthly expenses.
The added policy function should also help reverse customer attitudes
The point when many families start thinking about protection is when they buy their first home. It is well documented that the challenge of FTB appears to be only growing in terms of affordability. Things that cannot be alleviated by the increase in interest rates in recent years.
This prompted many FTBs to take the first step of the ladder to average age. Although we have seen some signs of improvement for young buyers, the overall trend is to increase age by 35 and over 40.
Delay awareness
There are some consequences to shifting this financial milestone to later adulthood.
There is a delay in awareness of financial protection, and many young people may not consider protection policies until later on considering that they have already formed a family.
It’s tempting for clients to choose one type of policy over another
This presents a challenge for the consultant as clients already face higher premiums for protection products, especially if they also experience health problems.
Drill down
However, this only helps to emphasize ongoing advice. Given that families tend to be too resilience, it’s important for someone to reframe the conversation and train them how they will actually cope.
Beyond identifying demand, being able to highlight the benefits and how products work together in the budget will also help avoid protection from being outgoing to avoid seeing it as a cornerstone of securing dreams.
It is shocking that even if they are sick or injured, they have to continue working.
It is also important to understand how consultants can help mix and match products and maximize the level and quality of coverage. The shift to the use of ordinary English should help clients understand, but it requires advice to articulate potential differences in policy and why one person is more appropriate than the other.
Customer Attitude
Clients also want to choose one type of policy over another. It is wise to help them understand why it is wise to take measures to combine factors of critical illness with income protection and the benefits of two single policies for joint policies, which will continue to be key to getting customers to convince customers to close their protection gap.
The added policy features should also help change the attitude of customers. For example, many people will see very real benefits and value when making an appointment with a virtual GP on demand.
There may be some degree of wishful thinking
While all agree that it is crucial for clients to understand and appreciate protection, and while there are many worrying statistics in the LV= report, perhaps the finding that all of us need to think about is that 77% of renters have never met a financial advisor.
As FTB ages, it will become increasingly important to find ways to attract a wider audience.
Edward Jones is Director of Protection Advice for London and the Country
This article introduces the February 2025 version Mortgage Strategy.
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