Jamie Page
|Head of Protection Distribution
In my last article I spoke about some key highlights of our latest research and shared the top financial fears and trends we’re seeing amongst consumers. I now move on to focus on an under protected segment of the market – self-employed workers.
Protection uptake – the same old story
Our research showed only 29% of self-employed workers had life cover. And just 17% had income protection. This is pretty alarming considering they won’t have access to employer sick pay or added company benefits. Self-employed workers could likely be more susceptible to an income shock than employed individuals. Whether it’s because new contracts fail to materialise, or unprecedented nationwide events hit the economy. Despite income protection arguably holding higher importance for self-employed workers, it’s the least prevalent insurance product.
Although self-employed workers are under insured, there is a heightened awareness of loss and concern. 46% said they are worried about a loss of income due to illness or injury. This presents an opportunity for further education with existing and potential clients.
Cutting back and cancellations
81% of the working population have changed their spending habits because of increases in energy prices, inflation, and National Insurance. And it’s not just small changes. In fact, almost twice the number of self-employed people in the UK, compared to those in traditional employment, said they had reduced pension contributions in light of the current cost of living increases. 6% had also cancelled insurance products. When it comes to cutting back on such expenses, the self-employed are much more financially exposed and should be considering the long-term risk and implications of these decisions.
Can they afford the risk?
Self-employed adults listed affordability as the most important aspect when purchasing an insurance product with 59% saying it was “very important”. And you can understand why, considering the current economic climate. But let’s flip this. When money and wealth is clearly so important to these workers, why are they then willing to risk a loss of income without a back up plan?
Future proofing insurance
I think, as an industry, we can work together to close the protection gap for self-employed workers. I would encourage you to review your existing client bank and have a segmentation plan. Knowing and understanding your clients will enable you to approach the conversation in a way that leads to a successful sales process. It will help you identify the risks for that specific client segment, along with the need, before advising on the solution.
As providers, our challenge is to make our income protection solutions more inclusive and flexible to the wide needs of your clients. We know job roles and contracts have become more progressive. There’s still a huge number of self-employed or part-time workers, and people expect more flexibility in their careers to achieve a work life balance. Income protection needs to mirror these changes, and this will be a considerable factor when enhancing our products and proposition.
You matter more
Don’t forget, there’s a lot of support out there to help with your client conversations. Why not take a look at our new refreshed income first toolkit and get access to persuasive tools, essential reading, CPD, and content to share directly with your client.
You can read our full research report Challenging Times.