Findings from Datamonitor have revealed that consumers are running the risk of leaving their loved ones struggling to cope financially if they die, become ill or loose their jobs.
The independent market analyst revealed that only 11.2% are choosing whole-of-life insurance based on what the policy offers.
Even more worryingly, it said, only 3.6% of consumers look at product features when choosing long-term care insurance.
It argued that educating consumers about financial capability and responsibility is the best approach to alleviate this problem.
“Many consumers simply perceive that they cannot afford protection insurance and those that do take it out focus more on price than what the product is there to do,” it said.
“Focusing on price alone is not the answer to financially safeguarding your loved ones against unforeseen events.”
Mya Myat Moe, analyst at Datamonitor, suggested that consumers don’t realise that now, more than ever, they need to ensure they have the right sort of cover for protection insurance.
“Apart from anything else, consumers are currently shouldering high personal debts so they need to make sure that if the worst does happen, their loved ones can count on insurance,” she said.
“Consumers need to be aware of the value of protection cover, so that not only do they take it out but they also choose a policy that delivers the right features to suit their financial situation. Ultimately, it’s about planning for the future, which is something that consumers aren’t doing due to the financial pressures caused in the fallout from the recession.”
“Consumers believe protection insurance is a luxury for those who can afford it but that couldn’t be further from the truth,” she added.
Moe concluded by urging insurers and the government to work harder to make sure consumers start to see insurance as a necessity to prepare for unforeseen circumstances, not something to cut back on when finances are squeezed.
