Research from The Exeter’s latest Health and Financial Fears report revealed that almost a third (32 per cent) of workers overestimate the value of statutory sick pay, which currently stands at just £116.75 per week.
In fact, only 27 per cent of workers knew the actual amount, and 8 per cent believed they would receive more than double what is available.
This is a concerning misconception. Poor financial education leaves people vulnerable. In many cases, they believe themselves to be more protected than they actually are. Yes, the economy is slowly bouncing back, but the need for a financial safety net remains.
Understanding the reality of statutory support is crucial to helping people recognise the importance of income protection in ensuring financial stability if they are unable to work due to illness or injury.
Consumer confidence and financial pressures
Increased awareness by itself is not enough. Inflation is levelling out, but living costs are clinging to historic highs, continuing to stretch household budgets. Mortgage repayments, day-to-day expenses, and energy bills – which rose by 10 per cent at the start of October 2024 – are challenging people’s ability to save.
With this in mind, it is no surprise that consumers may be hesitant to shoulder any new financial commitments. An ongoing challenge for us all is to position income protection as a safety net against potential financial hardship rather than an added expense in the eyes of consumers.
Without income protection, an unexpected illness or injury could mean falling behind on mortgage/rental payments and wider financial commitments.
At the same time, the political landscape is shifting. The new Labour government is focusing on economic growth and boosting business productivity, which could help build consumer confidence.
Should households become more secure in their financial outlook, they may feel more inclined to invest in products like income protection to safeguard their future.
Opportunities for growth
We continue to face a number of challenges but there are windows of opportunity to increase income protection sales.
Consider renters. The UK currently has around 4.6mn private renters – a demographic that has traditionally been underserved by the protection industry.
As housing prices remain high, more people are renting for longer and they are just as vulnerable to financial shocks as homeowners.
Unlike homeowners, who may have the safety net of property equity to fall back on in the worst-case scenario, the average renter could have fewer financial assets in times of need.
Income protection offers a much-needed lifeline, ensuring they can meet their rental payments, and other essential outgoings should they be unable to work in the event of illness or injury.
