Confusion around underwriting and pricing is “discouraging” UK consumers from taking out life insurance, research commissioned by UnderwriteMe has found.
The research, which surveyed 2,000 UK adults, found 61 per cent of respondents faced at least one barrier when looking to purchase life insurance.
While price was the key driver, with 32 per cent of adults worried it will be too expensive, 21 per cent said they were unsure whether insurers would pay out.
While another 14 per cent described the process as complicated or overwhelming.
A further 14 per cent said they would not know where to begin or who to trust when looking into cover, and some stated that life insurance was something they plan to deal with later in life.
UnderwriteMe chief revenue and customer officer, Nilesh Patel, said: “Most people understand why life insurance matters, but lack of clarity around how the process works is putting people off, leaving them lacking vital protection from a product that should be essential.
“Cost worries play a big part here, but uncertainty about what will influence the final price can be just as significant. When quotes change or the purpose behind certain questions is not fully understood, it can create doubt.
“For some people that doubt is enough to delay a decision, even if they recognise the value of having that protection in place.”
Gender and generational differences
The research also found there was an “array” of gender and generational challenges emerging.
Some 55 per cent of female respondents said they would be frustrated if the price they were initially quoted for life insurance increased after answering personal questions.
This compared to 47 per cent of male respondents.
Further analysis showed that women were more likely than their male counterparts to cite cost as a barrier, with 34 per cent and 30 per cent identifying it as a barrier respectively.
A similar disparity was also identified along generational lines, with younger adults being more likely to feel “unsure” about how to begin the life insurance process.
The research found 20 per cent of 18-34 year olds were uncertain about how to obtain life insurance, compared to 15 per cent of 35-54 year olds and 8 per cent of those aged 55 and over.
Similarly, cost concerns around life insurance were highest among the younger generations, specifically among Millennials and Gen X, with 36 per cent of both age groups citing it as a concern, compared to 26 per cent of Boomers.
It was also found that Gen Z were most likely to describe the process as confusing or overwhelming, reinforcing the idea that younger consumers may struggle more with navigating protection decisions.
The Protection Distributors Group board member, Roy McLoughlin, added that if consumers were abandoning the journey due to confusion around the process or pricing, it was “incumbent” that the advisory community work together to make the process far smoother than it currently is.
“Underwriting needs to be slick, speedy, and easy to navigate which will certainly help adviser confidence and consumer confidence and uptake of protection policies,” he added.
tom.dunstan@ft.com
What’s your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
