More young people risk ignoring Life Cover
The percentage of younger people who are buying life insurance fell by 5% during the last 12 months.
Figures released by Protection specialists LifeSearch, which cover the period January 2006 to January 2007, show that the number of young people (aged 35 years and under) buying some form of life cover fell by 5%, to 31%, of all protection policies written by LifeSearch during this period.
As well as falling sales amongst younger age groups, research suggests that younger people can also make poor product choices. Young people (18-29) without dependants are almost 6 times more likely to their insure life (74%) than their income (13%).
In addition, just 12% of the 18-29 age group felt they had purchased the product which they felt best suited their personal circumstances, while 37% of this age group based their buying decision primarily on price alone, rather than comprehensiveness of cover or suitability of product.
LifeSearch Policy Adviser, Matt Morris, said: “This shows a worrying trend that the UK protection gap will continue to grow. Although the average age of first time buyers is probably rising, many younger people still have debts, mortgages and families that need financial protection in the event of the main income provider being unable to work.”
Life insurance is less expensive for younger people not only because of age, but also because younger people are likely to be healthier, which keeps premiums low.
For example, it would cost a healthy non-smoking male looking for £200,000 of level term assurance over a 30 year term £3,834 more if he bought cover at age 40 rather than age 35.
Age |
Monthly premium |
Cost over 30 year term |
35 |
£20.70 with Royal Liver |
£7,452 |
40 |
£31.35 with Royal Liver |
£11,286 |
Source: www.lifesearch.co.uk (0800 316 3166)
Kevin Carr, Head of Protection Strategy, said: “Clearly more work needs to be done to reach the 35-and-under age group so they fully understand why protection is important and which type of cover is best for their individual circumstances. Many are either buying no financial protection at all, or are relying on the internet to get the best deal, which might work in car insurance, but not with financial protection.”
During the same period a number of other statistics emerged from the internal LifeSearch review:
- Critical Illness Cover up 18%
- Income Protection sales remained flat
- The number of smokers insured up 2%
- Average sum assured has risen £9,159 to £126,416
- Overall new business up 39%
- Average time to accept a policy is down 4 days to 22 days
- Average time to on-risk has fallen 6 days to 28 days
Notes to editors
- Agency: Communicate Research; Fieldwork: 14th-16th August 2006; Sample: 1001 UK adults with protection insurance.
- All other research taken from internal LifeSearch sales figures between January 2006 and January 2007.
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