As consumers struggle to keep up with the rising costs of food, fuel, and other essentials, many have begun to change the way they manage their money.
Revealing the results of a social media poll of 723 financial planners and insurance professionals conducted in June, the Chartered Insurance Institute said that the cost-of-living crises have pushed a significant number of consumers to shop around for cheaper protection policies, cut back on how much they spend, and pull cash out of their savings pots.
Among the Personal Finance Society members who responded to the survey, 43% saw clients reducing spending and 37% reported having clients who pulled cash out of their savings to keep up with rising costs. Additionally, 12% of members had clients who decided to postpone their retirement and 8% said their clients increased the amount they borrowed.
Around two out of five Chartered Insurance Institute members also reported seeing a significant increase in the volume of consumers looking for the cheapest policy premium. Moreover, one in five insurance professionals revealed consumers have reduced the amount of cover they purchase, while 18% said a growing number of policies have been allowed to lapse.
“Many consumers have never seen costs increase at this speed,” said Matthew Connell, director of policy and public affairs of the Chartered Insurance Institute. “With such a significant reduction in disposable income it makes sense to act now to ensure your finances are in the best shape possible. But taking a good, hard look at your finances rather than just spending less is essential in the current climate.”
He added: “Increasing debt levels or cutting back on insurance cover today could cause consumers more serious problems in the future and compromise their future financial resilience. Financial planners can help consumers review their lifestyle, face today’s cost-of-living challenges and future proof their finances. We would encourage any consumer who was considering cancelling, reducing their cover or going for the cheapest policy to discuss the long-term implications of such an approach with an insurance or financial planning professional.”
