Consumers are now more likely to pay for their insurance with credit, a study by Premium Credit, a premium finance company, has found. The increase has come with the pressure felt by households’ budgets as the cost-of-living crisis has persisted.
“Paying for insurance with credit is becoming increasingly popular given the current cost-of-living squeeze on budgets which our research shows are set to tighten in the year ahead,” said Adam Morghem, Premium Credit’s strategy, marketing, & communications director.
Premium Credit’s Insurance Index found that 21% of adults were more accepting of paying for insurance polices with credit compared to 15% in the previous year. The research found that this was because the use of credit for insurance helped with managing their finances.
There were 44% of respondents that admitted to credit helping them manage their money as 40% said that the rising costs in living expenses made it more difficult to pay for insurance with a lump sum. Twenty per cent (20%) said that the increases for the price of their insurance left them considering credit options.
When it comes to their insurance, there were 9% of respondents who said they had switched from paying a lump sum for their car insurance to paying for it monthly in the previous year. Nine per cent (9%) paid monthly for home insurance as well. In contrast, there were 8% of adults who now paid in lump sums for their car insurance instead of doing so monthly, as 8% also switched from monthly home insurance payments to a lump sum.
Notably, more people held a negative view on their finances as 34% expected their standard of living and ability to regularly pay their bills to worsen in the coming year, while 8% were afraid of their standard of living immensely deteriorating forcing them to cut back on their budget. Only 16% held the notion that they will see improvements in their standard of living.
Homeowners that have mortgages felt the most pressure as 64% said they either will need to make cutbacks or be forced to do so once the current fixed rate deals expired. Sixteen per cent (16%) said that they need to make cutbacks to their household’s budget.
Mortgage customers were most likely to reduce their spending, with 50% saying that they will cut back on expenses made when going out. Forty-six per cent (46%) said they intended to cut back on spending for clothing, while 44% will be spending less on holidays. Nine per cent (9%) of the respondents intend to cancel some of their insurance policies just to reduce their spendings.
Premium Credit advised customers to consider premium finance which can enable them to pay monthly for insurance coverage, instead of a lump sum, to spread payments.
“Premium finance is specifically designed for insurance buyers to conveniently spread the cost of insurance policies. At a time when household finances are under pressure it can be a good alternative to other forms of credit,” explained Morghem.
Premium Credit’s Insurance Index monitors insurance buying and how it is financed twice every year. The research that was conducted by Viewsbank involved 1,073 adults aged 18 and older while Consumer Intelligence had 1,043 adults.
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