The Life Insurance Market
Isn’t it bizarre that a country with a highly developed economy, such as the UK, should neglect to prepare its citizens in any way for dealing with that complex but essential world of personal finance?
Is it any wonder that we have a mountain of personal debt when we can open a bank account at 16 without having the slightest clue what it means to save? Or take out a mortgage at 18 without a clue about debt or financial protection? There is an appalling lack of financial education in UK schools yet understanding how money and debt work is a key part, and major source of stress, during every adult’s life.
When I was studying for my GSCEs in the early 90s, lessons such as Home Economics, Religious Education and Metalwork were compulsory, yet the knowledge that would have served me more substantially - knowledge such as understanding how pensions work- was never an option. Times haven’t changed.
Is it any wonder that the man and woman on the street so often fail to grasp the workings of personal finance when they, for the most part, have so little knowledge or training in these matters.
It seems a no-brainer that personal finance lessons - such as how to manage debt, how mortgage and pensions work, the need for financial protection, how to save and invest your money – should be taught at an early age. In reality the way we learn is usually through bitter experience. It doesn’t have to be this way.
Few of my friends from outside understand financial products, especially Protection. For that matter even less know what an IFA is (“there's an adviser at my bank!”). It should come as no surprise that we have a trillion pound protection gap and an economy in turmoil.
Changing this approach to personal finance education will benefit the consumer and the economy as a whole, and it would shine a light of reality into a debt-addicted culture. And the place to start must be educating the next generation of Brits, before the shroud of financial mismanagement envelops the potential bankruptees of the future.
So, what is the current policy on personal finance education? Well, no-one actually seems to know. I have investigated and, beyond a very vague statement from the department of education that “the subject is touched on” (they couldn’t tell me where or when or at what age), I drew a blank. There is no plan of educational action for now or for the future.
As an industry we talk repeatedly of closing the protection gap, but we need consumers to understand its relevance in safeguarding their financial health before we can make major headways into addressing their protection needs. Education is one place to start. The FSA has also rightly spoken about the importance of financial education in the past.
This is a glaring hole in our education system and our economic future. At present there seems to be no will to fix it. Perhaps it’s time we tried to change the status quo.
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