Nearly half (44 per cent) of UK workers overestimate the monthly cost of income protection, life cover and cash plan policies, research from The Exeter has revealed.
The research, which surveyed 2,000 UK workers, reported a “clear” message that affordability remains key, with 40 per cent of UK workers naming it as the most important factor when considering insurance products.
However, The Exeter’s most recent Health and Finance Fears report brings to light a “significant” gap between perceived cost and reality.
Some 37 per cent of UK workers overestimate the cost of both income protection and life cover policies.
Additionally, in the case of cash plan policies, the percentage of UK workers overestimating the cost rises to 59 per cent.
The Exeter director of distribution and marketing, Steve Bryan, said: “The implications of these findings are profound.
“Despite widespread awareness of protection and health insurance products and health insurance products amongst UK workers, they are missing out because of misconceptions around price.
“More worryingly, they are likely disregarding insurance without being aware of the options available.
“As an industry, we have a collective responsibility to challenge perceptions around affordability so that financial resilience and access to private healthcare become valuable options for more consumers.”
Monthly cost prediction
Those surveyed predicted the cost of monthly income protection to be £35.20 per month, higher than the actual average of £24 for a two-year limited benefit term - a product in high demand in 2022.
Similarly, life cover also shows a disparity, with a mean predicted cost of £34.70, higher than the actual average of £26 per month.
Cash plan policies are also not exempt from these misconceptions, with a predicted cost of £34.90 per month, despite plans starting from as little as £7.
Additionally, CoverMyBubble managing director, Emma Astley, said: “It’s sadly unsurprising that consumers have some real misconceptions about the cost of protection and health insurance, as it’s something that we often face with new clients.
“You have to wonder how many UK workers would benefit from protection and yet never have a first meeting with an adviser to discuss their options, as they assume that they simply cannot afford the premiums.
“For many consumers, the idea of protection often starts and ends with life insurance.
“Many benefit would benefit from considering income protection or health insurance during these turbulent times, and it’s a question for advisers and insurers on how to increase consumer awareness of both product options and accurate costs.”
The Exeter’s data also showed a “prevalent” uncertainty around the cost of insurance among UK workers.
It showed that 19 per cent responded with “I don’t know” when estimating the cost of a private health insurance policy.
This uncertainty was clear on other insurance products too, with 20 per cent of UK workers uncertain about the cost of income protection, life cover (16 per cent), and almost a third (32 per cent) for cash plans.
tom.dunstan@ft.com
