More people are buying income protection policies as a result of COVID-19 as individuals have become increasingly wary about unprecedented events and the financial implications these may have.
52% of UK consumers stated that their decision to buy income protection insurance was influenced by the COVID-19 pandemic – up from 37.4% in 2020 as per findings from GlobalData’s 2020–21 UK Insurance Consumer Surveys.
Individuals have become increasingly wary about unprecedented events, rethinking how best to protect themselves against such occurrences. The UK’s furlough scheme prevented mass redundancies, yet many individuals still felt the financial squeeze. Some customers may feel more vulnerable to job losses than in the past and are thus examining ways of protecting themselves in an uncertain economy. Equally, the pandemic has increased 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 income) for an extended period.
GlobalData’s survey shows that accident and sickness cover was the most purchased type of income protection policy in 2021. However, 55.4% of all income protection products sold provide cover against redundancy – either unemployment insurance or comprehensive income protection.
In addition to 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. Had they not discontinued products temporarily, the proportion of income protection policies accounted for by unemployment cover would probably 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. As such, COVID-19 will continue to trigger appetite for income protection products in the medium to longer term.