She reasons: “Sick pay through work is often much less than people assume, savings are typically insufficient and while relying on parents might be an option, that’s hardly a solid back-up.”
“At the very least, all millennials have basic living costs that need to be met, and if they are just starting out in their careers they might not be able to save enough into a rainy day fund to replicate their income,” says Iona Bain, founder of the Young Money Blog.
She also notes that millennials are far from immune from the most common causes for claims on income protection (IP) policies, which are depression and musculoskeletal pain.
Ms Bain warns: “Young workers who feel insecure in their jobs and are desperate to make headway in the workplace are at serious risk of burnout, which could trigger any number of long-term health problems, both physical and mental.
“The problem is particularly acute if you are a gig worker or self-employed, as you can't depend on any paternalistic support from an employer, and the process for claiming benefits is notoriously difficult.”
Safety net
For many millennials, having to think about protection is simply not appealing and not at the top of their list of priorities.
But those same people may already have insurance policies in place for their most expensive household items, including their phone, and car, and would probably not think twice about taking out travel insurance, even for a short break.
Ms Thomson believes: “Ensuring you have a financial safety net might be a bit dull, but it’s sensible and can avoid financial catastrophe, so find out your options and make a plan.
“An income protection policy is therefore what we’d recommend people look for at first, followed by critical illness and life cover if extra cover is needed.”
Stephen Crosbie, protection director at Aegon, argues it is not millennials who need protection but rather anyone who has a job, owns a house, supports a family or runs a business. That could be someone of any age, of course.
However, he acknowledges: “Age and life stage may have an effect on what someone’s protection needs look like. These vary for every individual depending on their circumstances and financial commitments but protection should form the basis of any financial planning, regardless of age.
“As long as people provide an income to support themselves and their family, all forms of protection remain important.”
