The COVID-19 pandemic has pushed more UK consumers to take out income protection insurance as many become increasingly concerned about the impact the unprecedented disruptions have on their personal finances, a new study by GlobalData has revealed.
According to the London-based analytics and consulting firm’s 2020-21 UK Insurance Consumer Surveys, more than half, or 52%, of respondents said that the pandemic had influenced their decision to purchase income protection coverage last year, up from 37.4% in 2020.
The research also showed that accident and sickness cover was the most in-demand type of policy, accounting for 44.6% of the purchase share in 2021. This was followed by comprehensive cover at 39.8%, and unemployment protection at 15.6%.
“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,” said Beatriz Benito, senior insurance analyst at GlobalData. “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.”
Benito added that the pandemic had increased Brits’ 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,” she said.
Of all income protection policies sold, 55.4% provide cover against redundancy, either unemployment insurance or comprehensive income protection. Apart from providing unemployment cover, comprehensive policies also offer protection in the event the policyholder becomes unable to work because of sickness or an accident.
“Soon after the onset of the pandemic, insurers temporarily withdrew unemployment cover as the prospect of high unemployment loomed,” Benito said. “Had they not discontinued products temporarily, the proportion of income protection policies accounted for by unemployment cover would be significantly higher today.”
“While societies around the world learn to live with the virus, new variants continue to create economic uncertainty, impacting consumer behaviour,” she continued. “As such, COVID-19 will continue to drive interest in income protection products over the medium to long term.”
