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Britain’s renters need protecting too – Miller

by: Jo Miller of The Syndicate, part of the Protection Review
  • 20/04/2018
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Britain’s renters need protecting too – Miller
The majority of people in the UK believe their partner or savings would provide the cushion required to support them in times of need, but the reality is they’d likely face a significant shortfall.

The Syndicate’s latest research showed the most popular fallback options in times of illness or injury were partners (42%) and savings (38%), well ahead of protection insurance at 8%.

A focus on the reality of individual financial situations therefore represents an exercise worthy of consideration by advisers seeking to show the value insurance provides, especially when advising alongside a mortgage.

 

Savings shortfall

Running parallel is the fact the majority of people in the UK (68%) have less than £10,000 in savings, according to The Money Charity.

The Syndicate’s research asked respondents how long they thought various levels of savings would last if they couldn’t work: 10 months was predicted for savings of between £5,000 – £10,000.

The report looks at the estimated savings gap, and clearly demonstrates that while there is a shortfall for everyone relying on savings, the consequences will be felt extremely quickly by those with between £5,000 and £10,000 put aside.

Savings at this level would provide an average income of £750 a month over a 10-month period, in contrast to average net monthly income of £2,257: in other words, a shortfall of £1,507 a month.

Although these tangible alternatives – partners and savings – to insurance would indeed prove useful, the sustainability of this strategy is questionable.

 

Private rental population

Meanwhile, The Syndicate also found that advisers risk losing touch with a big chunk of their potential future market, as the private rental population continues to grow.

Finding a way to reach this audience – an audience that is arguably as much in need of the security that protection insurance affords as mortgage buyers – will be critical to growing the market.

The rental population in the UK now stands at 4.7 million households, with more than a quarter (27%) of families renting from a private landlord, according the latest English Housing Survey.

Reaching their highest level since the 1960s, private renters spend a median level of £650 per month on rent, rising to £1,452 in London.

Inclusive of all benefits, an average of 41% of their income is spent on rental payments, in contrast to owner occupiers who spend an average of 18% on mortgage costs.

The research found half (49%) of private renters felt they were coping, as opposed to feeling financially comfortable, while a quarter felt they were struggling to varying degrees.

 

Losing a relationship builder

With the key trigger to buying insurance being a house purchase, the industry risks losing the main way of establishing a relationship with much of the market at present.

This issue is compounded by the fact that it’s not just lack of awareness about insurance that prevents people buying it, but also indifference.

For those showing no interest, there is a need to sell the value that insurance offers in terms of peace of mind but also highlight all the added extras.

Early interventions can be used, even if a claim isn’t being made, to help add value to the policyholder and stop situations spiralling out of control.

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