Life Insurance Purchases Amongst Young People Falls

Protection specialists LifeSearch have released figures showing that life insurance bought by young people aged 35 years and under, had dropped by 5% compared to the previous 12 months. Young persons life protection policies had made up just 31% of all life cover written by LifeSearch during this period.

Policy advisor for LifeSearch, Matt Morris, commented about the falling sales figures that "This shows a worrying trend that the UK protection gap will continue to grow."

Despite life insurance being less expensive for younger people because of their age and perceived better health, which helps to keep premiums low, the research suggests that as well as falling sales figures, young people are making unwise product choices.

People aged between 18 and 29 who have no dependants, are nearly six times more likely to insure their life rather than their income. Those that insured their life stood at 74 per cent, whilst insurers of income were a mere 13 per cent.

Morris said, "Although the average age of first time buyers is probably rising, many younger people still have debts, mortgages and families that need financial protection in the event of the main income provider being unable to work."

In addition to these figures, only 12 per cent of young people aged between 18 and 29 said they felt that had purchased a product which best suited their own circumstances. Instead of basing their decision on which policy to buy on comprehensiveness of cover or suitability of the product, 37 per cent said they chose the policy on price alone.

These figures lead to the Head of Protection Strategy, Kevin Carr to say, "Clearly more work needs to be done to reach the 35 and under age group so they fully understand why protection is important and which type of cover is best for the individual needs. Many are either buying no financial protection at all, or are relying on the internet to get the best deal, which might work for car insurance, but not with financial protection."

However, research commissioned by TCP Lifesystems showed that around a third of people aged between 18 and 24 felt that the process of buying a life insurance policy was too invasive and the sales approaches adopted by insurance companies were too aggressive.

Further figures to come out of the research showed that 32 per cent of people aged under-25 described the sales approach and procedure as uncomfortable.

TCP's business development director, Ashley Hale commented, "With 81 per cent of those individuals surveyed being happy to share medical details if this speeds up the process, then this suggests that with a well designed expert system, there is scope to radically increase the proportion of business that is underwritten at the point of sale. On the other hand, the under-25 age range appears to have greater concerns about sharing their medical information.

Perhaps we have to think more about these different attitudes when we design our processes and procedures. It's apparent that one size doesn't fit all."

By Phil Benson